Directly related to the unemployment problem, the home ownership rate has been the lowest since 1965, and foreclosures have been at their highest levels since the Depression. The decline in housing values and the banking crisis precipitated by the housing price slide have meant that even those Americans with jobs are poorer than they were just several years ago because their homes are worth on average 25 percent to 50 percent less. For most Americans, their homes are their biggest asset. When their home value collapsed, so did their financial security.
As a result of high unemployment, the housing crash, and the broader economic stasis, the poverty rate has hit an historic high; it’s over 15 percent, with one out of ten children living in poverty. The official poverty level is an annual income of $22,314 for a family of four. From 2007 to 2010, the poverty rate has risen faster than in any three-year period since the recession of the early 1980s. The number of food stamp recipients has also hit record highs, with over 48 million people receiving food benefits. In fact, all government-provided benefits, including Social Security, unemployment insurance, food stamps, and other social welfare programs, rose to record highs during the Obama years.
At the same time, wages from private businesses shrank to their smallest share of personal income in U.S. history. A record-low 40 percent of the nation’s personal income came from private wages and salaries for much of Obama’s term. Meanwhile, individuals got about 18 percent of their income from government programs. This represented a major shift in the source of personal income away from private wages and to government programs.
This was the Declaration of Dependence in full action. We hold these truths to be self-evident, that all men are created equal, except people making over $250,000 per year. Those people are endowed by Obama with the responsibility to give all of their earnings to those making less. The redistributionists have created a culture in which the poor depend on them to be fed and clothed, while the rich are doing everything in their power to be free of the Iron Fist of government. Never before has a Declaration attempted so brazenly to promote “fairness” by instituting the most unfair practices imaginable.
The problem, of course, is the unsustainability of this rapid dependence on the government. The federal government relies on private wages to generate income taxes to pay for its ever-growing and ever more expensive programs. Government-generated income is taxed at much lower levels or not at all; for example, food stamps and Medicaid are not taxable income. So the more people dependent on the government, the more tax revenue is needed to support them and the more per private-sector employee is required, hence the assault on the “rich” and ultimately on the middle class. The upside-down pyramid gets heavier and heavier until it threatens to collapse. The risky game of the redistributionists is to expand the number of people at the top of the pyramid, those dependent on those carrying the load, the earners, makers, and risk takers, without totally collapsing the structure. The western European socialist democracies pushed the upside-down pyramid too far, and the whole thing imploded. The American redistributionists are playing with fire, and they know it—and most of them want the implosion.
Meanwhile, Team Obama constantly tried to distract us from the brutal economic reality created and sustained by its radical course. In mid-2010, Treasury Secretary Timothy Geithner wheeled out “Recovery Summer!”
On August 3, 2010, Geithner penned an op-ed for the New York Times titled, “Welcome to the Recovery,” in which he argued that “the American economy shows that we are on a path back to growth.... The actions we took … helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery.... We suffered a terrible blow, but we are coming back.”
Not quite. Instead of changing course and trying some pro-growth policies, Team Obama went back to the exclamation points. The administration fired up “Recovery Summer, Part Deux!” in 2011, and that didn’t fly either. Anemic economic growth and little to no real job creation had a way of trampling the good times. At some point, even Obama’s daily economic briefings petered out. In fact, other than Tim Geithner, his entire economic team has fled faster than O.J. in the white Bronco. Larry Summers, Christina Romer, and Peter Orszag: they’re all gone. Who has replaced them? Does anybody even know? Word on the street is that they’re all filming the new Three Stooges movie, while the real Moe, Larry, and Curly now work in the West Wing and have been placed in charge of the nonexistent economic briefings.
By the fall of 2011 the unemployment crisis had been so bad for so long that Obama had to propose a second “jobs plan,” the American Jobs Act. Released after his annual sun-splashed August Martha’s Vineyard vacation, the plan called for—surprise!—$447 billion in new spending.
Interestingly, it was a few Senate Democrats who put the kibosh on it. They didn’t want to have to take a vote, lest its costs come back to haunt them, or against it, lest the liberal base get furious. Reid offered a 5.6 percent millionaires’ surtax as a way to pay for whatever survived in the bill. “I’m comfortable” with that, replied Obama. Meanwhile, the full “jobs” bill met a grisly death in the Senate, where it couldn’t even pass a procedural hurdle. Reid subsequently broke it into parts, many of which went down in defeat as well.
As the unemployment crisis grew, Obama lapsed into preposterous explanations for why the economy sucked. Over the course of several months in 2011, he blamed President Bush, a dysfunctional Washington, millionaires and billionaires, ATMs, the Japanese tsunami, the European debt crisis, and Bigfoot. Okay, I made up Bigfoot. But his kitchen-sink approach to blaming others and outside events for the poor economy rather than his own destructive policies took on a desperate air. Obama made it clear (for example, through his comments that ATMs destroyed bank teller positions) that he believes that certain private-sector innovation kills jobs. He wants to be able to direct innovation and technology in certain areas of the economy, particularly government, health care, and energy. By pouring taxpayer money into kook-approved industries, he intends to kill off more traditional, private-sector industries in these areas. Using Obama’s logic, ATMs should be extinct right now, since Obama’s handling of American funds dried the country up like a watering hole in a spaghetti Western.
In fact, in their successful attempt to “remake” many sectors of the economy, the kooks also have embarked on a wildly overzealous application of job-killing regulations. Done through legislation, bureaucratic mandate, or executive order, the onslaught of regulations has been a creative way Obama and the kooks have kept unemployment at painfully high levels. Every federal bureaucracy—from the EPA to the National Labor Relations Board to Health and Human Services—has been on a regulatory joyride, crushing countless jobs along the way. In the 1950s, the Federal Register’s Code of Regulations ran about 11,000 pages. Today, it’s over 80,000 pages. At one point in the fall of 2011, federal agencies were working on 4,200 rules, 845 of which directly affected small businesses. Over 100 of them were major rules, with an estimated economic cost of more than $100 million each. With the wave of new regulations came a wave of new government employees, as the administration sought to redistribute employment from the private to the public sector. Since Obama took office, employment at federal regulatory agencies is up 13 percent and their budgets have spiked by 16 percent. And that’s before some of the biggest regulatory overhauls, such as ObamaCare and Dodd-Frank financial “reform,” are fully implemented. Federal regulations drive up costs for businesses and job creators, who must stop hiring, lay people off, or pass along the increased costs to consumers. The result of the regulatory pile-on is a cloud of stifling uncertainty that stifles economic growth.
Among the worst, most job-killing of the new regulations: the Obama-appointed, pro-union, and anti-business National Labor Relations Board, which attempted to restrict where a private-sector company could locate and create jobs in America—a fundamentally anti-American premise—and they did it with the support of the president. On April 20, 2011, the NLRB issu
ed an outrageous ruling against the Boeing Company—the nation’s top exporter—for proposing the construction of a new, $1 billion facility in South Carolina, a right-to-work state.
As Boeing made clear, not a single union employee in their Washington State facility would lose his or her job as a result of the proposed new plant, but the NLRB still sided with the union, which has repeatedly carried out strikes against Boeing in recent years. By the end of 2011, the International Association of Machinists approved a new contract with Boeing in which the company agreed to build its 737 Max jet in Washington State. The NLRB then dropped its lawsuit. The whole episode was an example of union and political extortion. Nobody should be surprised if other companies, having seen this spectacle of brass-knuckles intimidation, ship their jobs abroad out of the reach of the NLRB.
On the health care front, ObamaCare is loaded with thousands of new rules and regulations, but some of the first to come on the scene directly violated Obama’s pledge that “if you like your current insurance plan, you can keep it.” A 2011 Kaiser Family Foundation survey found that just 56 percent of current employees’ current plans are preserved by ObamaCare’s “grandfathered protection.” The reason the percentage was so low? Firms reported that the new regulations made being grandfathered too difficult or limited the company’s flexibility in the future.
The Dodd-Frank financial regulatory bill is another regulatory monstrosity. The financial crisis was a direct result of radical social engineering in the economy. Leftists designed the Community Reinvestment Act in 1977 to promote home ownership to minority and low-income groups who had generally been shut out of the American dream of owning a home. Jimmy Carter signed the law, which Bill Clinton then expanded and broadened in the 1990s. The CRA put a legal gun to the heads of banks and other financial institutions to make loans to people who could not afford them. Community organizations such as ACORN and other shakedown artists turned home ownership into a civil right, which then made the banks the bad guys if they resisted that new “right” or the good guys if they made the loans. The process became so perverse that a bad credit score became a way to get favorable lending treatment.
The banks, then saddled with these incredibly risky loans, sought ways to bundle and sell them and otherwise spread out their risk. The house of cards grew shakier every day, particularly as the Federal Reserve’s monetary pumping in the early 2000s kept interest rates low, money easy, and home prices climbing artificially. Dodd, as chairman of the Senate Committee on Banking, Housing and Urban Affairs, and Frank, as the then chairman of the House Committee on Financial Services, had oversight over the banks and the government’s big mortgage giants, Fannie Mae and Freddie Mac. Instead of sounding the alarm about the banks’ and GSEs’ rapidly deteriorating condition and pushing reform, Dodd and Frank covered for them, actively blocked the Bush administration’s attempts at reform, and, in Frank’s case, even promoted them as sound just months before the subprime crisis blew up.
Instead of rotting in jail, Frank and Dodd—who got his own sweetheart mortgage deal through Countrywide Financial—wrote a “reform” bill that focused mainly on the parts of the industry that hadn’t screwed up. It institutionalized “too big to fail” while pounding the financial sector with a vast array of new regulations.
Perhaps Dodd-Frank’s biggest horror was its creation of a major new bureaucracy within the Federal Reserve System to “monitor” consumer loan products. The Consumer Financial Protection Bureau operates under the direction of a single “czar” who serves a five-year term, oversees a $500 million budget that is not subject to congressional or other oversight, and cannot be fired, even by the president, except under extraordinary circumstances. The first of the CFPB czars, Richard Cordray, was appointed by Obama in an early 2012 recess appointment when the Senate wasn’t in recess. This regulatory monstrosity created twenty-one new rules in its first six months alone. The CFPB is a dictatorial fiefdom that is making things such as credit and debit cards, checking and savings accounts, and consumer loans tougher to get and more expensive to use, has virtually no checks on its unlimited power, and will do nothing to prevent a future financial crisis.
Of all the ghastly job-killing regulations slammed on American businesses by Team Obama, however, some of the most comprehensive and expensive are the ones flowing endlessly out of the Environmental Protection Agency. Obama chose to use the EPA as a bureaucratic sledgehammer to accomplish by diktat what he could not accomplish legislatively: a fundamental transformation of the energy sector. During the 2008 campaign, Obama made it clear what his intentions were when it came to remaking the American energy industry. “If someone wants to build a coal-fired power plant, they can,” he said. “It’s just that it will bankrupt them.” Shortly after he was inaugurated, Obama made his point even more firmly, stating that “under my cap and trade system, electricity rates would necessarily skyrocket.” Like using your refrigerator, television, air conditioner, heater, and blow dryer? It’ll cost you … a lot more.
Obama fully intended to “bankrupt” the coal industry in order to make way for the Left’s “green energy” agenda. Largely born out of the kooks’ obsession with the man-made global warming scheme, “green energy” was an ideal vehicle for redistributionism. For followers of the Church of Gore, man-made global warming, later rebranded as global climate change, was built on the idea that our carbon emissions were being trapped in the atmosphere (possibly stuck in a gas bubble resulting from one of Al’s late-night Taco Bell runs), causing the earth’s temperature to rise rapidly and thus endangering everything from Florida’s beaches to the Arctic polar bears. If humanity were to be protected from this scourge of industry, industry must fall on its knees, beg for forgiveness, agree to a slew of new government mandates, and, oh yeah, fork over gazillions of dollars more as part of its penance.
By 2010, however, the fall of the Church of Gore began. The revelation of the Climategate e-mails and other evidence that global warming alarmist scientists conspired to manipulate data, suppress conflicting information, extrapolate from weak or unsupported evidence (such as the UN’s Intergovernmental Panel on Climate Change’s claim that the Himalayan Glacier would melt in 2035, which was based on one group’s claim that it would melt in 2350) severely damaged the credibility of the man-made warming scaremongers. Serious questions were raised about whether they were willing to abuse science to serve the greater redistributionist goal. As a result, there has been ever-growing pressure on the redistributionists to force policy changes in energy since the “consensus” they had built around scienitifically dubious “evidence” is falling apart.
Even with the aggressive push from the Gore cultists, green technology had been relatively slow to develop, in large part because there wasn’t a market for it. Traditional fossil fuels dominate, providing us with 98 percent of our energy, and without a massive government push to destroy the traditional energy sector, it would take far too long for “green” to gain traction. They couldn’t wait for free enterprise to sort it out. What couldn’t compete in the marketplace needed—and got—a huge helping hand from Big Daddy.
Cap and trade came first. The leftists sought to create a new cap on emissions and then enforce it with a series of hugely expensive mandates. The costs, of course, would get passed on to the consumer, hence those “necessarily skyrocketing” electricity prices. Because everything requires energy—from development to production to transport—cap and trade would have been tantamount to the largest tax increase in the history of the world. And by its very nature, it would have been highly regressive, hitting the poor and middle-income households harder, since they spend more of their income directly on energy, such as gas to get to work or home heating. The point was to begin to destroy the coal industry to make way for the leftists’ beloved “green energy” while giving the federal government an entirely new—and massive—revenue source.
The legislation passed the Democrat-controlled House but died in the Senate, despite the Democrats�
� filibuster-proof majority, because a number of Democrats from coal-producing states such as West Virginia and Pennsylvania didn’t take kindly to Obama’s attempt to kill their leading industry.
With cap and trade dead legislatively, Obama and the kooks began making end runs around Congress to achieve their energy objectives without having to deal with Congress. Enter the EPA.
Obama empowered his EPA administrator, Lisa Jackson, to use the Clean Air Act as a rationale to impose new regulations like fairy dust (which will be regulated next) on everything from industrial boilers to farm dust, cement, greenhouse gases, and mountaintop coal removal, which a federal judge overturned. Most of these regulations have already led to plant closures, massive job losses, and higher prices for consumers. In late November 2011, Jackson admitted that objective in an interview with Energy NOW News, in which she was asked about the coal-fired plant closures as a result of the EPA regulatory spree. “What EPA’s role is to do is to level the playing field so that pollution costs are not exported to the population but rather companies have to look at the pollution potential of any fuel or any process or any plant or any utility when they’re making their investment decisions.” At the core of any centrally planned economy is the state’s forcible leveling of the playing field. Burden some industries with so many costs that they can no longer operate and replace them with state-sanctioned ones. An added benefit: the new rules will bring in tons of cash from the fines levied on companies that cannot comply with them.
Under the cumulative weight of all of the new Obama EPA regulations, the National Economic Research Associates—using the federal government’s own data—projects that they would cost America over 180,000 jobs per year between 2013 and 2020.
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