The economy, not social injustices, should be House Democrats priority
In January 2009 Barack Obama was sworn in as president. At the time, the US was in the midst of a very severe recession. The top priority for government economic policy should have been economic growth. Growth would quickly end the recession, start a recovery that should last a year or so and then lead to a six to eight expansion. Unfortunately, that never happened. Instead, the Democrat’s were led to cure the perceived social injustices in the world.
The Federal Reserve massively increased the money supply and dramatically reduced interest rates to near zero. That alone should have stimulated economic growth. Then Congress passed a massive government spending bill that resulted in the annual budget deficit topping $1.4 trillion in 2009. The deficit stayed above $1 trillion for the next three years. That too should have led to increased economic growth.
But it simply didn’t happen. In fact, during President Obama’s eight years in office, annual growth never reached even 3%. The historical average for annual economic is in the 3% to 3 ½% range.
Obama was the only president in history to serve a term in office without having at least one year where economic growth was at least 3%. The economy is finally in an expansion, likely resulting in 2018 being the first year annual economic growth exceeded 3% since 2005.
President Obama’s economic failures
The most expansive Monetary and Fiscal policies ever simultaneously implemented in the US, failed to grow the economy, although the actions were enough to at least end the recession. The problem was that the economy never got out of the recovery and into expansion.
The simple reason is that President Obama’s top economic policy priority was curing perceived social injustices rather than stimulating economic growth. Each time Obama took action to solve these perceived social injustices, burdens were placed on economic growth.
The Affordable Care Act (ACA), the Dodd/Frank bill, raising taxes on the highest income earners, raising the capital gains tax and imposing thousands of new regulations were meant to cure those perceived social injustices. Instead, they added burdens to economic growth and stagnated the economy while doing little else.
The ACA added to the cost for business. The Dodd/Frank bill caused banks to severely limit lending. Raising taxes on the highest income earners and raising the capital gains tax reduced capital formation. New regulations added to the cost for business. Each of those actions tends to reduce economic growth.
Economic growth is President Trump’s top priority
As a result of President Trump’s policy of placing economic growth as the top priority, we have finally entered an economic expansion. Unless a newly elected Democratic House of Representatives forces some growth-stifling policies through Congress and/or the Federal Reserve gets too aggressive, the expansion should continue for many years.
Democrats say that when they take office in January they will place curing perceived social injustices as their top priority.
Many Dems perceive Donald Trump as president to be among the most pressing social injustices. As such many Democrats will continue to resist Trump’s policies.
Some, like Maxine Water, want to impeach Trump, despite a lack of impeachable offenses.
The Democrats know that they won’t be able to put any of their agenda into law since both the President and the Senate are in Republican control. If Democrats are truly concerned about improving the welfare of Americans they will work with Republicans. And keep America’s economic expansion going.
Instead, they will concentrate on introducing bills that have no chance of passage. The cries of Russia will continue as they attempt to fabricate the non-existent collusion between the Trump campaign and the Russians. This is a waste of time and resources for both parties.
She still lost in 2016 — so let’s move on
If the Democrats get over the fact that they lost the presidency in 2016, they may be able to push through at least some of their policy goals.
Democrats should realize President Trump has the mind of a Republican and the heart of a Democrat. As such he may be sympathetic to at least some of their policies. President Trump’s announcement of a bipartisan prison reform bill is an excellent example of the President’s heart and willingness to react to reasonable proposals.
The economic problems we suffer, as well as some of the social problems we are experiencing today, are a result of the long-term stagnant economy. Very little new opportunity was evident during the almost decades-long slow growth under Obama. Some are questioning whether Capitalism is really best for the US.
Many are even advocating Socialistic policies. What they fail to recognize is the Obama agenda is what took America down the path to a socialist — global no growth economy. So why would anyone want to return to that?
The US went from birth of a new nation to the most prosperous, most powerful and most free country on earth in about 150 years, mainly because of the freedom Americans had to pursue their dreams with little government interference. American’s need to recognize that socialism is opposite to the individual American’s dream of home ownership, a good paying job and a chicken in the family pot.
Socialism will increase the role of government, limit individual freedom and further stagnate the economy.
God helps those who help themselves
While it is true that American has a domestic, and global, social responsibility that responsibility cannot overshadow America’s economic strength. Economic growth leads to true prosperity. Prosperity will reduce the severity of virtually all social problems including crime, homelessness, hunger, and healthcare.
Democrats should take positive action to continue to encourage growth. Once true prosperity returns, the country will be in a much stronger position to tackle social issues.
Since it has been such a long time, Americans have forgotten what true prosperity feels like. If the Democrats in Congress would set reaching economic prosperity as their top goal, all Americans would benefit.
Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.