Obama Flunks Economics 101, Switches to Demagoguery

Posted: Apr 04, 2014 12:01 AM
Obama Flunks Economics 101, Switches to Demagoguery

WASHINGTON - President Obama flew to Ann Arbor, Mich. Wednesday where the jobless rate is close to 8 percent to boast about his economic policies.

He ridiculed and mocked Republican ideas about how to strengthen economic growth, which has slowed to less than 2 percent, and touted his own plan to raise the hourly minimum wage for America's lowest paid workers.

It takes a lot of chutzpah to go into one of the country's major manufacturing states where the unemployment rate is 7.7 percent and tell its residents that you've got all of the answers about how to create more jobs.

It takes even more gall to tell Michigan's job-seeking workers that the answer to their troubles is to raise the minimum wage from $7.25 an hour to $10.10 -- an idea the Congressional Budget Office says will kill at least half a million jobs, and possibly a lot more.

But there he was, calling the Republicans' fiscal policy ideas a "stinkburger," and a "meanwhich." The president, who hasn't a clue how to put America back to work, has resorted to Chicago-style name- calling.

There are people who love that kind of political combat, but his falling job approval polls suggest that you can't fool all the people all the time, as Abraham Lincoln once said.

Sadly, however, Michigan has plenty of company in the unemployment sweepstakes. Tiny Rhode Island's jobless rate is 9 percent. In Illinois, Obama's homestate, it's 8.7 percent. In Nevada, home to Senate Democratic Leader Harry Reid (who's never uttered a word of complaint about Obama's shameful jobs record), it is 8.5 percent.

The list of high unemployment states is pretty long, and includes some of the most populated states in the country: California, 8.0 percent, New Jersey, 7.1 percent, New York, nearly 7 percent.

Obama, and his advisers, were also boasting about the average national unemployment rate in the mid-6 percent range. But millions of Americans, as the above numbers show, are not in the average column, and are struggling to find full time work, though all too often are forced to take part-time instead.

White House apologists point to the lower 6.6 percent unemployment rate. But the declining percentage rate is largely the result of a shrinking labor force participation rate, as discouraged, long-term, jobless Americans stop looking for work and are no longer counted among the ranks of the unemployed.

If these workers officially reentered the work force, the real unemployment rate would be 9.6 percent, says the University of Maryland's business economist Peter Morici.

The administration's defenders say the declining labor force is the result of rising baby boomer retirements, but it turns out that's not true.

"Baby boomer retirements are not driving down the adult participation rate. The percentage of working seniors aged 65 to 69 has risen to 30 percent from 27 percent over the last decade," Morici says.

Many, if not most, older, lower income Americans are not working because they want to, but because they must to make ends meet.

Another long-ignored crisis in the economy is the higher number of Americans forced to work part-time, but who need full-time employment. Morici says that, to a large extent, is due to Obama's anti-job policies.

"Twenty million Americans over 25 are working part-time, owing much to poor economic conditions and government incentives not to work full time," he says.

Obamacare "encourages employees to work part time to avoid losing benefits, and many employers limit them to fewer than 30 hours per week to avoid health insurance mandates" that will drive up their payroll costs.

But the core of the Obama economy's disfunction is its persistently weak economic growth rate over the last six years. In the Reagan and Clinton presidencies, economic growth averaged 3.4 percent and job creation soared.

In the Obama economy, the average economic growth rate is a pathetic 1.9 percent, one of the weakest in the post-war era.

But you didn't hear Obama talk about any of this in his speech in Ann Arbor this week. Indeed, he didn't talk about economic growth at all. I doubt he even understands its importance to capital investment and job creation.

Instead, he wants us to believe the answer is to swell the payrolls of small businesses who are just struggling to keep their heads above water in a low growth economy, let alone give their workers a raise.

Even in the very liberal, Democratic state of Maryland, where Gov. Martin O'Malley has been raising taxes on anything that moves, there is trepidation over the idea of raising employer costs. A state Senate committee voted to slowly phase in his plan to fully raise the minimum wage to over $10 an hour by mid-2018.

Obama came into office knowing virtually nothing about economics and he's made it painfully clear that he hasn't learned anything over his past five plus years.

For example, in his speech at the University of Michigan, he cited Henry Ford, who, he said, gave his workers raises so they could "afford to buy the cars they were building."

In fact, the genius of Henry Ford was his invention of assembly line manufacturing that turned out more cars per day at a far cheaper cost that brought their price within the reach of the average American.

I mean, this is something we all learned in Economics 101 in college, but not Obama.

Instead, he clings to what he knows best: demagoguery. Challenging the GOP to support his impotent minimum wage plan, he said, "You can give America the shaft, or you can give it a raise."

Kind of brings tears to your eyes, doesn't it? But this is the kind of street rhetoric we can expect to hear for the next two and a half years.

Sadly, it's the level to which the president has sunk as he helplessly watches the world's greatest economy fall into disrepair.