Saturday, January 28, 2012

Jim Pethokoukis And The Temple Of Doom

Having been booted from both US News and World Report and Reuters, my favorite econ blogger punching bag Jim Pethokoukis has given up any pretense of being balanced and credible and is now working directly for the right-wing Death Star of financial think tanks, the American Enterprise Institute.  And as usual, he's heralding the end of the Obama presidency.

In his State of the Union response the other night, Indiana Governor Mitch Daniels neatly summed up Mitt Romney’s (who has a roughly 90 percent chance of being the GOP nominee according to Intrade) economic case against President Barack Obama: “The president did not cause the economic and fiscal crises that continue in America tonight, but he was elected on a promise to fix them, and he cannot claim that the last three years have made things anything but worse.”

In other words, the Obama Recovery stinks. Even if today’s GDP report—for the fourth quarter of 2011—shows 3 percent growth or better, it would be just the fourth time that has happened since the economy began turning up in June 2009: 3.8 percent in the fourth quarter of 2009, 3.9 percent in the first quarter of 2010, and 3.8 percent in the second quarter of 2010. But no 3 percent-plus quarters since then.

The first nine quarters of the Reagan Recovery, by contrast, looked like this:  5.1 percent, 9.3 percent, 8.1 percent, 8.5 percent, 8.0 percent, 7.1 percent, 3.9 percent, 3.3 percent, 3.8, percent, 3.4 percent. In fact, the Reagan Boom went from the first quarter of 1983 until the second quarter of 1986 without notching a sub-3 percent GDP quarter.

Fourth quarter numbers came in Friday at 2.8% growth.  But here's what we weren't doing during the Reagan years:  fighting two wars in the Middle East, keeping the top marginal tax rate at 35%, paying a trillion-dollar plus prescription drug benefit to Big Pharma, and paying a multi-trillion dollar bailout to banks in the US and around the world.  Considering what this President has inherited, the fact that we're still even having positive GDP growth is astounding.

Meanwhile Republicans want to cut, cut, cut federal spending.  Looking at what austerity cuts have done to Spain's unemployment rate -- now at a staggering 22.9% -- does anyone actually think Republicans will follow through on such a plan knowing full well what it will do to the economy here and the politics it means?

Then again, that explains all the laws disenfranchising poor voters, doesn't it?

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