Report: “Obama Recovery Worse than Bush Recession”

Posted by Tina

The President likes to blame the Bush administration for our economic problems. He likes to whine about inheriting a recession from President Bush. He claims his opponent doesn’t care about the middle and lower classes and apparently believes his hostility toward business is helpful. But his blaming and posturing don’t impress. The American people aren’t interested in excuses and finger pointing. We just want to know the causes and solutions that will put us back on track. The first step in problem solving is identifying the problem. A new report, issued by Sentier Research, and highlighted in a Wall Street Journal article, sheds some light on the causes of middle class stagnation and offers some clues about what needs to be done to put middle class Americans on a more solid footing again:

It’s true that the Bush years overall were also not great for household incomes. According to Sentier’s analysis, real median household income is down about 8% from $55,470 in 2000 before the dot-com bubble burst. Some of this decline is due to the continuation of a trend of smaller family size, lower fertility rates and more Americans living alone. But some was also due to the subpar economic growth across the 2000s.

That slow growth trend has become worse since the latest recession, and this is where Mr. Obama is implicated. The President portrays the financial decline of American families on his watch as part of a decades-long trend. He’s wrong. Real income for middle-income households rose by roughly 30% from 1983 to 2005, according to the Congressional Budget Office. The political left likes to blame the ebbing of union power. But nongovernment unionization fell dramatically in the 1980s and ’90s, and incomes rose.

So what does explain falling real incomes? Slow growth, yes, but another culprit has been rising prices–especially for food, gasoline, medical procedures and college tuition–that have eroded worker purchasing power. The Federal Reserve claims this is no problem because “core inflation” has been relatively contained. But core inflation excludes food and energy prices, which are two of the biggest components of consumer budgets.

The big pay freeze is also the bitter fruit of public schools that have failed to teach the basic skills and knowledge needed to succeed in a competitive global economy. Rising health-care costs have also forced employers to take money that used to go into higher wages to pay higher premiums.

A key driver of higher wages in the 1980s and 1990s was a surge of capital investment in computers, plant and equipment, which made Americans workers more productive. When Mr. Obama pledges to raise taxes on investment income (capital gains, dividends and small-business profits), he is making it costlier to innovate and modernize. That plays out over time into slower gains in productivity and wages.

Several major areas of our economy need to be addressed and Romney has a plan for each.

Our paychecks would stretch a lot further if energy prices were lower. Not only would personal budgets find relief, every single product that is made and the means of delivering it to our stores and doorsteps would too. This is a problem Mitt Romney has vowed to make a high priority in his administration for getting Americans back to work and creating energy independence.

Another area requiring attention is the high cost of higher education. Romney has proposed changes that would help to bring costs down but ultimately universities and states will have to make changes too. Competition in the form of internet studies and professional schools may help bring down tuition costs but, ultimately, as long as parents are willing to pay ridiculously high tuition for their kids and students are willing to go deeply into debt colleges and universities have little incentive to bring their tuition costs down.

Obamacare has not created relief in the cost of healthcare and insurance. Federal controls, a new bureaucracy, and lack of competition continue to push healthcare costs upward for most Americans. Romney and Congressional Republicans (and some Democrats) are poised to scrap the complex, bureaucratic federal plan and institute policy changes that will add market pressures, patient choice, and doctor freedoms. These will help to bring costs down, offer greater choice, and restore confidence for doctors, hospitals and researchers.

Romney has criticized money policy under Barack Obama:

“QE2, as it’s called, which was a monetary stimulus, did not have the desired effect,” the former Massachusetts governor said in an interview on CBS’s “Face the Nation.” “It was not extraordinarily harmful, but it does put in question the future value of the dollar, and will, obviously, encourage some inflation.”

“A QE3 would do the same thing,” Romney said. “But the potential threat down the road in inflation is something which we have to be aware of, and the last QE2, the last monetary stimulus, did not put Americans back to work, did not raise our home values, did not bring jobs back to this country or encourage small businesses to open their doors.”

He has proposed an audit of the federal reserve and indicated his money policy will be very different:

In an interview Thursday with Fox Business News presumptive Republican presidential nominee Mitt Romney declared not only his preference for a new Federal Reserve chairman to replace Ben Bernanke should he be elected, but he also took an unusually explicit stand on current Fed policy in opposing a further easing move.

Moreover, the Republican convention, which is set to start next week in Tampa, Fla., will call for the restoration of the dollar’s link to gold, which was severed some 41 years ago by Richard Nixon, the Financial Times reports. Drafts of the party’s platform show the influence of libertarian Rep. Ron Paul in calling for an audit of the Fed as well as a return to the gold standard, proposals that previously were relegated to the fringe of the mainstream parties.

Whooo doggies…is it any wonder Obama is calling Romney’s policies extreme!

Romney’s plans are just what the doctor ordered to get Americans working and earning again…come on November.