Fair-Weather Capitalists: Conservative Politics Gone Wild
As recently as a few months ago, Republicans were betting on beating Obama on the issue of the economy, with an emphasis on unemployment. They were counting on history repeating itself: no president since FDR has won a second term when unemployment rates exceeded 7.2% on election day. The rate was 7.8% when Obama took office, which is about where economists predict the rate will be next November. That would seem to make Obama extremely vulnerable, causing Republicans to salivate.
But these numbers are not static, and trends matter. When Obama took office the number of jobs lost per month was greater than 700,000, so the trend of unemployment was sharply up. If predictions are borne out and the rate is about 7.8% next November, the trend line will be sharply down from a peak rate tickling 10 percent. A downward trend engenders optimism, which is good for America but bad for Republicans.
The fact is that our economy is improving under Obama by measure of most major indicators. For example, comparing August 2011 to January 2012, we see unemployment fell from 9.1 to 8.3 percent. The much touted increase in gasoline prices is partially offset by a 2% decline in natural gas prices and a 0.3% decline in food prices. There is good news on retail sales and industrial production. We are now seeing a rebound in sales of previously-owned homes, a reversal indicating the market there has bottomed out.
Blaming Obama for the collapsing economy and declining stock market he inherited was to be the primary strategy for Republicans in the presidential election. But, oh, how strange that is (even before being made obsolete by a recovery). Remember that George Bush complained for eight years that every economic woe over which he presided was Clinton’s fault. This is not hyperbole, but fact: he claimed in a speech at a Mississippi high school in August 2002 that the weak economy could be explained by the fact that, “When I took office, our economy was beginning a recession.” Even as he was walking out the door of the Oval Office Bush blamed Clinton for Wall Street’s collapse in a final attempt to push his failures onto his predecessor. Said Bush, “I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so” before he became president. Bush simply took no ownership or responsibility for the economic decline and near collapse that happened on his watch.
Bush’s false assertion about what he inherited from Clinton is a classic example of the Big Lie, an untruth repeated so frequently that people accept the falsehood as real. What Bush actually inherited from Clinton was, at worst, a mild reduction in growth following eight years of historic economic expansion. That conclusion is not mine, but that of National Bureau of Economic Research (NBER), a non-partisan organization that is considered the definitive word on business cycles. Here is the NBER November 26, 2001 report:
The NBER’s Business Cycle Dating Committee has determined that a peak in business activity occurred in the U.S. economy in March 2001. A peak marks the end of an expansion and the beginning of a recession. The determination of a peak date in March is thus a determination that the expansion that began in March 1991 ended in March 2001 and a recession began. The expansion lasted exactly 10 years, the longest in the NBER’s chronology.
Be clear about this; Clinton presided over the longest expansion recorded, and when he left office that momentum carried the economy forward to a peak in March 2001, into the first month of the Bush presidency. Bush took office January 18, 2001. But the Bush debacle is nevertheless all Clinton’s fault even though no president in modern history ever inherited an economy as healthy as what Bush got from Clinton.
I bring up this history of the transition between Clinton and Bush because it reveals a remarkable and glaring hypocrisy in the Republican mind set now that a Democrat occupies the White House. By Bush’s own formulation, Obama should blame Bush for all of the country’s economic woes during the entire tenure of his presidency, even at the end of a second term. Republicans should accept this assessment without question. After all, that is what Bush did to Clinton with full Republican support. Obama’s position in assigning blame to his predecessor is in fact much stronger, for what he inherited from Bush is vastly more onerous than what Bush was gifted from Clinton. Bush inherited a reduction in growth while Obama was bequeathed an economy on the verge of catastrophic collapse. But with the roles reversed, transitioning from a Republican to a Democrat in the Oval Office, Republicans repudiate everything they previous said about the role of a president’s successor.
So. Republicans blamed Obama for what he inherited from Bush, but disavow any idea that Obama should be credited with the astonishing growth during his presidency. We are back to the tired Republican refrain: all bad things are due to the current president; all good things are a consequence of actions taken by his predecessor. But the facts belie this fantasy. Republicans hollered with indignation when Obama supporters pointed out that he inherited the problem of rapidly rising unemployment and an economy on the verge of total collapse. They absolved Bush of all responsibility not just one month into Obama’s administration, but actually prior to Obama taking office, preaching that just the anticipation of his presidency was causing the market collapse.
Republican statements about Obama in early March 2009 are stunning in their duplicity. Obama was to blame for a collapsing economy after only five weeks in office but George Bush was free of any responsibility after eight years. Let’s take a quick look at right wing publication headlines as the new Administration settled in:
• Bloomberg.com (March 6, 2009): “Obama Bear Market Punishes Investors as Dow Slumps.” In this article the claim is further advanced with, “President Barack Obama now has the distinction of presiding over his own bear market.”
• Wall Street Journal (March 6, 2009): “Obama’s Radicalism is Killing the Dow.” Author Michael Boskin prognosticates that, “It’s hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president’s policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.” The DOW is now over 12,000 so the claim was blatantly wrong; I have heard no apology yet.
• Perhaps most astonishing of all, John Tanny of Real Clear Markets, wrote on November 25, 2008, an article entitled, “This Is Obama’s Market, Good and Bad.” Obama was not yet president! That did not stop Tanny from writing that, “Lacking clarity, investors can only guess about what’s ahead based on Obama’s decidedly anti-business rhetoric used during the campaign. Whatever direction he takes, it should be clear that today’s stock market is the Obama stock market, so it’s up to him to decide its basic direction.” Even though Obama was not yet president.
These claims were absurd when made, and have been proven wrong factually. Where are Bloomberg, the WSJ and Real Clear Markets now? Where is the praise for Obama for a market moving beyond 12,000? Silence. Nothing but silence. No apology; no mea culpa. These organizations blamed Obama for a declining market after one month is office, but now offer no support for his policies three years later, policies that have lead to a growing economy recovering from the abyss of a Bush recession; policies vigorously and ferociously opposed by Republicans. Voters should be screaming with frustrated indignation at this outrage.
While the economy has a long road ahead to recover from the depths of the downturn, the trends are clearly positive. Perhaps most striking in this regard, and the most detrimental to Republican aspirations, is the health of the stock market, and where credit lies for the recovery. Again, some history is helpful. On Bill Clinton’s first inaugural day, the DJIA was at 3310. The market was 6813 when he was next inaugurated. At the end of Clinton’s second term, on the day Bush took office, the DJIA was at 10,578; that is the market Bush inherited from Clinton. When Bush left the Oval Office on January 20, 2009, the Dow was at 7,949, a decline of 25% over the eight years Bush was president. By March the DJIA had completed its tumble to bottom out with a 12-year low at just over 6500. Blindly forgetting their tale from Clinton to Bush, Republicans blamed Obama for the continuing decline from 7,900 to 6,500 during his first month in office, but not Bush for the loss from 10,600 to 7,900 in eight years as president. About one year later the Dow hit 11,000. The stock market doubled in value during Obama’s first 14 months in office. Now the DJIA exceeds 12,000. No wonder Republicans no longer mention “Obama’s economy.” The closest they now foray into this territory is a sad effort to blame Obama for gas prices. That is all they have left. But none feel embarrassed by the long-held view, now fully discredited, that the economy was declining under Obama due to his socialist tendencies.
And so the Republicans suddenly want to change the subject. We get Santorum becoming nauseated over a JFK speech about separating Church and State, arguments over gay marriage, controversy over contraception and Romney repudiating his own views on a woman’s right to choose. Extreme views on social issues play well to the right wing base that controls much of the primary mechanism, and so each candidate is trying to out-nut-case the other with inflammatory, outrageous statements and positions. Every time Santorum opens his mouth, another vote somewhere falls to Obama. Let’s hope the Republican primary seasons continues to be arduous with no clear winner as the candidates dig themselves into an ever deeper whole of extreme views that will never play well in a national election. With unemployment declining and the Dow rising, Republicans will only become ever more desperate, creating a widening gap with mainstream America. November 2012 is looking up in the face of the GOP’s tenuous relationship with reality. Outrageous hypocrisy may sell in the Tea Party, but not with the majority of Americans.
Dr. Jeff Schweitzer is a former White House senior policy analyst the author of five books, including A New Moral Code and his latest, Calorie Wars. Learn more about Jeff at his website.