It’s a Tough Time to be President – Part 1, the Economy

American Presidents often receive more credit than they deserve and more blame than they should have to shoulder. Their popularity and later their legacy depend as much or even more on the cards they are dealt than the manner in which they play them.

As President Obama moves towards his last two years of his Presidency, his poll numbers have dropped into the low 40% range. Probably the two most important factors which affects the American people’s evaluation of a sitting President are the state of the nation’s economy and the level to which the United States is able to influence world affairs to our county’s advantage. Even before he became President Barack Obama was faced the biggest economic downturn the country has ever seen short of an out and out depression. Its effects linger on six years later. He also inherited two wars from his predecessor which left the nation war weary and with little tolerance for involvement in foreign conflicts. At the same time the lingering effects of those inherited wars and the so called Arab Spring have made our involvement in new conflicts necessary to safeguard the security of the American people.   Probably no President since Franklin Roosevelt had the deck so stacked against him.

In this the first of two related articles we will examine the first reason for President Obama current lack of popularity, the economy.

As President Obama was sworn in, the economy was in a downward spiral not seen since 1929. Huge investment banks were failing, the stock market had tanked, and credit availability was almost nonexistent. Companies with excellent credit ratings couldn’t get the customary short term loans necessary to pay their workers and keep their business running until already earned revenue could be booked. Money for mortgagees had dried up. In so many ways the economy was grinding to a halt. Whether the cause of the economic downturn which started in the last months of the administration of George W. Bush can be blamed on his administration might be subject of some debate. However, there is no doubt that the new President inherited a huge economic mess.

Almost immediately the Obama administration was forced to bail out the very banks whose reckless pursuit of big profits had triggered the downturn. In the opinion of most economists these efforts were absolutely necessary keep our country and the rest of the world from slipping into a major depression which had the potential of being worse than crash of 1929. However, ordinary Americans know little and care less about macro economics. All they could see was that the very banks which had caused the crisis were being bailed out with taxpayer money. Needless to say these actions, while they may have been absolutely necessary, proved to be very unpopular with ordinary people The fact that those “loans” to the banks were eventually all paid back with interest was not heavily reported.

With economy spiraling down out of control, within five months of President’s Obama inauguration, the country’s unemployment rate topped 10% with the underemployment rate running much higher. Then the economy began to recover, but very slowly. After suffering the worst downturn in 90 years and almost sliding of the cliff into depression, the economy had dug itself a deep hole and the climb out was predictably going to be a long and difficult one. To complicate things further, the Republican Party took over control of the House of Representatives. GOP leaders decided that the best formula for regaining power in Washington was to insure that President accomplished nothing, the welfare of the country be damned. They became the party of “NO” and shot down every piece of legislation which the President proposed to help the country recover more quickly.

When the economy is in a deep ditch, unemployment is high, everyone is afraid to spend money and businesses aren’t hiring, there is only one sector of the economy with the capability to provide the stimulus necessary to get money flowing again. That entity is the federal government. The textbook formulas for pushing an economy towards recovery is make money available for loans at cheap interest rates and to pump plenty of government funds into the economy. Then once the economy recovers interest rates can be allowed to inch up again and the government is able to refill its coffers because increasing business activity and lower unemployment brings in more tax dollars.

The Federal Reserve, unhindered by political mischief, did its part by using the mechanisms it possessed to drive down interest rates to all time lows. During the first two years in office President Obama and the Democratic controlled congress passed large stimulus packages including a funding large infrastructure rebuilding projects and putting teachers, fireman and policemen back to work. However, when the Republicans took control of the House of Representative they came to the conclusion it was not in their best interest to aid in the country’s economic recovery. Their reasoning was that keeping the country in the economic downturns gave them the best of winning the Presidency and retaking the Senate in 2012. So, instead using the power of the government to stimulate the economy, the House Republicans hid behind the mask of “fiscal responsibility” did everything in their power to cut government spending and reduce the size of the federal government. This of course provided a negative stimulus to the economy and sent many federal workers to join the ranks of the growing number of unemployed. The country can take little solace in the fact that the approval numbers of House Republicans are now several orders of magnitude worse than those of President Obama.

While the House Republicans were not successful in capturing the presidency in 2012 or in taking back the Senate, they did succeed in slowing what was already going to be a very slow recovery. The big corporations, the business champions of the Republicans, also helped slow down the recovery for their own selfish reasons. As business conditions improved and their profits increased, many of those corporations stockpiled piles of cash and kept reinvestment in their infrastructure and new hiring to an absolute minimum. Instead of hiring unemployed American workers when they needed to fill new jobs, many outsourced those jobs to other countries whenever possible. They also benefited from high unemployment. They didn’t have to give their workers big raises when alternate job opportunities were sparse and there were unemployed workers waiting to the place of anyone who quit. As stock prices soared and rich investors got richer, the fate of ordinary people did not improve accordingly. Many former members of the middle tasted poverty for the first time when they lost their jobs and couldn’t find comparable employment. Many others who kept their jobs saw their standard of living stagnate and often deteriorate. It is little wonder that the majority of the people aren’t happy with their government.

All of these factors – a very deep recession, House Republicans seeking to cut government rather than stimulating the economy, corporations concentrating on lining their pockets and those of their share holders – combined to make the recovery very slow indeed. However, over the last five years the improving economy has steadily been increasing the number of new jobs every month and unemployment, which reached a peak of 10.2% in mid 2009, was reduced to 6.0% last month. However, we still have a ways to go before we can return to the 4% to 5% range were experiencing in 2007 and 2008 before the economy headed south. More importantly, the middle class and those living in poverty still have not recovered fully.

So the rich have become a lot richer during this long recovery while the lot of ordinary Americans has improved little or not at all. There is no doubt that the President’s low job approval numbers are due in large measure to the impatience of ordinary Americans with the very slow recovery of the economy which does not seem to be benefiting them very much. When you marry their dissatisfaction with that of the rich who would never vote for a Democrat and the redneck Republicans who hate the very idea of this President and who haven’t the sense to vote in their own selfish self interests, you began to understand why President Obama’s approval percentages are currently in the low forties.

We all have a hard time remembering that the performance of the country’s economy is often more dependent on the hand a President is dealt than the way he plays it, especially when the other players at the table are stacking the deck against him.

(Next time we’ll explore how multiple foreign problems have also conspired to cause the President’s approval ratings to slide.)

Cajun   10/1/14

Random thoughts of opinionated Cajun