Obamanomics: Conservatives See Broken Economy

"The commitments we make to each other. . . do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great."

--Barack Obama, Inaugural Address (2013)

“The commitments we make to each other.” Obama is talking about robbing Peter to pay Paul--taxes to pay for government.  But what has Obamanomics--bigger government--done for Paul?  

From conservative Robert Samuelson at the Washington Post:

there are 3.2 million fewer jobs now than at the previous high. The official unemployment rate is 7.9%, but it would be 14.4% if it included part-timers who would like full-time work and discouraged workers who have stopped looking. . . Scarce jobs are the nation's first, second and third most important economic and social problem.

Samuelson notes unemployment isn’t expected fall below 7.5% until 2015, making six years above 7.5%-- the longest stretch of high joblessness in 70 years. America, he believes, has gone from being “an expansive, risk-taking society to a skittish, risk-averse one.”

Samuelson points out that while in the boom years, personal saving as a share of income fell from 10.9% in 1982 to 1.5% in 2005, by 2012, it was back up to 4.4%, limiting the economy's expansion to rates -- lately, 1% to 2%-- too weak to absorb our jobless.

To Samuelson, “Pessimism produces a sluggish economy; a sluggish economy produces pessimism,” a psychological shift grounded in the fact that the financial crisis and Great Recession were largely unpredicted. Americans are now building wealth to protect themselves against unknown dangers, making the country “hostage to a stubborn, restraining psychology.”

From Rich Karlgaard, publisher of the conservative Forbes:

“It once was true that as General Motors goes, so goes the U.S. economy. Today that is truer of Wal-Mart, and that's a problem.”

Karlgaard believes Wal-Mart faces a “long season of headwinds:”

• The expiration of the payroll-tax cut will continue to hurt, as Wal-Mart's customers will sorely miss that lost $80 per month. 

• Food prices are rising faster than overall inflation--going up 3%-4% in 2013. 

• Gas prices are up 30 cents a gallon in 2013, and to get to nearly all of Wal-Mart's more than 4,000 American stores, one must drive. 

• Wal-Mart shoppers have a higher unemployment rate than the national average. 

Karlgaard points out that only 23% of Wal-Mart shoppers have a four-year college degree. The degree-less suffer more, with an employment-to-population ratio of only 54%, as compared to the general population’s 62%.

Only 54% of the college degree-less population working!

 From Nicholas Eberstadt of the conservative American Enterprise Institute:

empirical evidence points to increasing dependency on state largess. The evidence documents . . . perverse and disturbing changes that this entitlement state is imposing on society.

Eberstadt wants us to consider that:

• since 1960, government payments of cash, goods and services to citizens have grown twice as fast as overall personal income, and now account for nearly 18% of all personal income in America—up from 6% in 1960. 

• social-welfare programs currently dispense entitlement benefits of more than $2.3 trillion annually, and the burden of entitlement spending is now over $7,400 per American man, woman and child. 

• in 1960, social-welfare programs accounted for less than a third of all federal spending.  Today, entitlement programs account for nearly two-thirds of federal spending, nearly twice as much as defense, justice and everything else combined. 
 

• 49% of Americans live in homes receiving one or more government transfer benefits, up 20% from the early 1980s, with only 10% due to old-age pensions and health-care for seniors.  The real cause: public reliance on "means-tested" programs such as Medicaid and food stamps. About 35% of Americans accept money, goods or services from "means-tested" programs, a percentage that has doubled in three decades. 

• entitlement outlays have sent men out of the work force--the proportion of adult men 20 and older working or seeking work dropped 13% from 1948 to 2008.  The male flight from work is so acute that more than 7% of men in their prime working age late 30s had totally checked out even before the Great Recession. Our workforce opt-out was twice that of contemporary Greece, and higher than in practically any Western European economy. 

• our flight from work has largely been a flight to government disability programs. The number of working-age Americans relying on Social Security disability increased dramatically to more than 8.8 million working-age men and women in December 2012, nearly three times as many as in December 1990. For every 17 workers, there is now one on Social Security disability. And another 3.6 million working-age Americans in 2011 obtained disability support from other government programs. 

• the biggest increases in disability claims come from "musculoskeletal" problems (e.g., back pains) and mental disorders (including mood disorders), meaning a government disability-insurance program originally intended to address genuine need is now set to run out of funds while Obama's still president. 

• Social Security and Medicare "social insurance" programs meant to pay for themselves cannot do so, having already made tens of trillions of dollars in future promises not covered by current funding streams. Using outside resources to keep them solvent will make them transfer programs, not insurance programs. 

Eberstadt argues that the “moral hazard” the social-welfare program explosion generates “is plain” to see. Transfers funded by other people's money foster a "something for nothing" mentality—especially when the transfers relentlessly grow year by year. We end up with a "taker" mentality that weakens our nation.

Obamanomics in short: hurting Peter and ruining Paul.