America needs an economic recovery from its ‘recovery’
This op-ed was shared by The Hill.
It has been eight years since our housing market bubble burst, and despite a “recovery” presided over by President Obama, the U.S. economy is still sputtering instead of picking up steam.
Americans instinctively know this, because they do not have more in their paychecks or bank accounts, and 63 percent of us cannot cover a $500 emergency. A recent report by the Congressional Research Service found that real gross domestic product (GDP), the value of the goods and services produced by the nation’s economy, has grown at an average rate of 2 percent per year since 2008. Compared with previous economic recoveries, when real GDP grew by 4.3 percent, this marks the worst period of economic growth since WWII.
Wages and discretionary incomes have not increased over the past seven years. The money the average family brings in, i.e. the median household income, adjusted for inflation, is down over $4,000 over the past seven years.
Why is our “recovery” so poor? Because instead of creating an economic environment that fosters growth, Washington bureaucrats have created policies that punish innovators and small businesses via measures like the Dodd-Frank financial reform law and the explosion of the regulatory state.
The labor participation rate in the workforce under Obama has declined significantly and is at its lowest rate in 40 years. The number of people in poverty has increased since 2008, from 39.8 million to 46.7 million in 2014. The economy has been so bad for so long that even mainstream economists now hail 2 percent gross national product growth goals as “good.”
Despite the anemic “growth” these policies have wrought, the left continues to trumpet that it will regulate, tax and spend the U.S. into prosperity. Liberals celebrate policies that punish successful businesses because they “didn’t build that,” and presidential candidate Hillary Clinton even boasts that she will tax the 1 percent even more “because that’s where the money is.”
Part of the American dream was once to build a successful business, but in this climate, is it any wonder that economic growth is next to nil? How many folks do you know that are willing to place a multimillion-dollar bet on the next decade of business performance?
Instead of fostering entrepreneurship, innovation and small-business investment, Clinton has proposed a raft of new spending programs that would be financed through higher taxes on the wealthy. It’s a proposal that should sound familiar — Obama offered the same method of paying for his policies in 2008. Yet, as we have seen, this has led to the current 1 percent growth rate over the last half year.
While Americans have struggled with stagnant wages for over 30 years — yes, 30 years — certain sectors of the economy, like healthcare and college education, which the government sponsors through targeted policies, have experienced exponential cost increases. During the past few decades, the price of a college education has grown at four times the rate of other goods on the consumer price index. In real inflation-adjusted prices, the cost of a college education doubled between 1996 and 2016. While a family in 1970 had to spend 16 percent of its annual income for a four-year tuition at a private college, today the same family would have to spend 36 percent, reports The Wall Street Journal. Both healthcare and education are segments of the economy that are already heavily funded by taxpayers and regulated by their “public servants.” Have you noticed that federal government intrusion is directly correlated with insolvency in just about every program it touches?
Politically connected groups and their lobbyists should not get to determine economic winners and losers. We need to put an end to rent-seeking in Washington. At the end of the day, it is each and every individual American who has to pay — and pay dearly — for these bad government policies. When Fannie and Freddie caused the housing crisis and the financial crisis that followed, the American taxpayer bailed them out. No banker in their right mind would give a mortgage to someone with no income. Only the federal government would do that.
Investment in capital and productivity is one of the clearest predictors of a healthy economy. Yet instead of investing in tools and research that could boost productivity, companies have been holding on to near-record levels of cash, and the increase in worker productivity has plummeted to barely more than 1 percent a year since the recession.
The U.S. needs leaders who understand business investment is the seed that fosters wage growth and a healthy economy. EBay, Amazon, Facebook, Microsoft and Apple — they were all small businesses before becoming the economic giants we know today. Instead of looking at businesses as bank accounts for politicians’ pet projects, we need leaders that recognize that business growth and success are the pathway to wage growth and prosperity for all Americans.
For almost a quarter of a millennium, the U.S. was the freest and most prosperous country the world had ever seen, but that prosperity seems to be vanishing. Even as the anemic U.S. economy struggles, the world’s largest economy and one of our biggest competitors, China, has experienced growth of between 6 to 7 percent this year. Ironically, while China’s communist government steers its country toward economic freedom, Washington’s crony capitalists are moving our country away from it. We have a major problem here, Houston!
We’re on a tragic path. Most people sense that. They feel the American dream is dead and America is slipping away. America’s powerhouse economy that values hard work and education was bequeathed to us by those who came before us, and who sacrificed so much to build and preserve this nation. We owe it to our children not to allow those sacrifices to have been in vain.
If all we’re trying to do is punish one group in order to pay another group, we’re not building, and if we’re not building, we’re not growing. And what we need right now, more than ever, is growth.