I have an op-ed running in today’s New York Daily News.
Since the point is to provide lots of facts, below I include a sourced version of it. You can read the clean version at the Daily News or the footnoted version below.
As is usually the case with op-eds, the editors chose the title, not me. I suggested Obama Economy Facts, which is nowhere nearly punch enough for the Daily News.
Thanks to the NYDN staff for their professionalism in working with me.
By Keith Hennessey
On the campaign trail, President Obama is talking about everything except his own economic record. He attacks his predecessor – a man for whom I worked – as his advisers promise a return to Clinton-era economics.
Rather than hearing about the last two Presidents, voters may instead want the President to explain the economic realities of his own 18-month tenure and what he foresees for the next two years. To further that understanding here are some facts.
At 9.5%, the unemployment rate is 1.8 percentage points higher today than when the President took office. There are 3.3 million fewer U.S. jobs than there were in January 2009. The U.S. economy has lost jobs in 12 of the 18 months he has been office, including the last two months.
In early August of last year, the President declared that, thanks in part to his policies, the U.S. economy was “pointed in the right direction.” We have lost jobs in six of the 12 months since then, for a net decline of 52,000 jobs. The 9.4% unemployment rate when he made this statement climbed to 10.1% and has since declined to 9.5%, still higher than it was last August.
The President signed into law an $862 billion stimulus law and two health laws that will create $788 billion of new entitlements over the next decade. Combine these with countless other smaller spending bills, several of which were labeled as emergencies and therefore not paid for, and the U.S. government is $2.5 trillion more in debt than on the day this President took office. That’s $8,000 more debt for every American man, woman, and child.
Signed free trade agreements with allies Colombia, Panama, and Korea have not been ratified by Congress because the President has not submitted them for approval. For 18 months, all three have sat in his inbox.
That’s the past and present. What, then, does the President have to offer a skeptical voter for the future?
Assuming his economic agenda is enacted into law, the Obama administration projects unemployment would average 9.0% over four years of the President’s term. If you assume he is re-elected, they project unemployment over his two terms would average 7.6%.
For comparison, unemployment during former President Bill Clinton’s tenure averaged 5.2% and during President George W. Bush’s tenure it averaged 5.3%. Former President Jimmy Carter’s unemployment rate averaged 6.5%.
Treasury Secretary Timothy Geithner says the President is returning America to “the pro-growth tax and fiscal policies” of the Clinton administration. Yet the nonpartisan Congressional Budget Office estimates this administration would have the federal government spend more than 24% of the overall U.S. economy over his term, a government 25% larger than during the Clinton era. Budget deficits would average 8.7% of the U.S. economy, compared to Clinton’s average 0.4% surplus.
The President proposes more government spending, higher tax rates and more debt than his Democratic predecessor.
If Americans had devoted all their income from the beginning of 2009 to June 8 of that year, they could have paid off the government debt inherited by this President from all his predecessors. Under the President’s policies, if they were to try this in 2013, they’d have to work until Sept. 24 9.
While attention focused on taxpayer funds invested in big Wall Street banks, Fannie Mae and Freddie Mac cost taxpayers $291 billion last year and will cost an additional $98 billion over the next decade. The new financial reform law does not address these two firms, which continue to cost taxpayers about $2 billion each month.
If the President has his way, on Jan. 1, taxes on many successful small business owners will rise. Investors will pay higher taxes on their capital gains and dividends, and some small businesses and family farms will once again be subject to death taxes. This isn’t undoing tax cuts for the rich, it’s raising taxes on small businesses.
Tanning salons and tobacco are not the only new taxes Americans will face. Drug companies, health plans and medical device manufacturers will charge higher prices as they pass new taxes on to their customers. Health Savings Accounts will no longer be usable for tax-free purchases of over-the-counter medications. Some workers will pay higher Medicare taxes, and some investors will pay a new 2.9% 3.8% tax.
Individuals and families who cannot afford health insurance will face a new tax, as will employers who cannot afford to provide their employees with health insurance. The President proposes to tax charitable contributions for high-income donors, American firms competing with foreign firms overseas, and, indirectly, your electric bill.
These facts may explain why President Obama wants to talk about somebody else.
Backup and Sources
- Unemployment rate = 9.5% in July 2010. Source: Bureau of Labor Statistics.
- Unemployment rate = 7.7% in January 2009. 9.5 – 7.7 = 1.8. Source: Bureau of Labor Statistics.
- In January 2009, total nonfarm payroll employment = 133.549 M. In July 2010, total nonfarm payroll employment = 130.242 M. The delta is 3.307 M. Source: Bureau of Labor Statistics. (Select More Formatting Options, then choose “Original Data Value” and Retrieve Data.
- Count the months that are negative, starting with the data point for February 2009. June and July 2010 are negative. Source: Bureau of Labor Statistics.
- “Today we’re pointed in the right direction.” Presidential Rose Garden statement, August 7, 2009.
- Count the months that are negative, starting with the data point for August 2009, the first one after this statement. Source: Bureau of Labor Statistics.
- In July 2009 (the data point for the Presidential statement), total nonfarm payroll employment = 130.294 m. In July 2010, total nonfarm payroll employment = 130.242 M. The delta is -52 K. Source: Bureau of Labor Statistics.(Select More Formatting Options, then choose “Original Data Value” and Retrieve Data.)
- Unemployment rate = 9.4% in July 2009, the data point for which the President made his “pointed” statement. The rate climbed to 10.1% in October 2009, and was 9.5% in the latest report for July 2010. Source: Bureau of Labor Statistics.
- All told, CBO now anticipates that the law will increase deficits by $862 billion between 2009 and 2019. Source: Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020, Appendix A.
- For the $788 B figure I included only the net deficit impact of the new insurance coverage provisions. I could have chosen a larger number to incorporate other deficit-increasing provisions. Source: Congressional Budget Office, Score of H.R. 4872 in a letter to Speaker Pelosi, Table 1 on page 5.
- Debt held by the public on January 20, 2009: $6,307 B. Debt held by the public on August 12, 2010: $8,787 B. The delta is $2.48 trillion. Source: TreasuryDirect.
- U.S. population = 310 M. $2.48 T / 310 M = $8,000 per person. Source: Census.
- “The Colombia Free Trade Agreement was signed on November 22, 2006. Colombia’s Congress approved the agreement and a protocol of amendment in 2007. Colombia’s Constitutional Court completed its review in July 2008, and concluded that the Agreement conforms to Colombia’s Constitution.” Source: U.S. Trade Representative.
- The Panama Free Trade Agreement was signed on June 28, 2007. Panama approved the TPA on July 11, 2007. Source: U.S. Trade Representative.
- The Korea Free Trade Agreement was signed on June 30, 2007. “If approved, the Agreement would be the United States’ most commercially significant free trade agreement in more than 16 years.” Source: U.S. Trade Representative.
- The Administration’s projected annual average unemployment rates are: 2009 = 9.3%, 2010 = 9.7%, 2011 = 9.0%, 2012 = 8.1%. These average to 9.025%. Source: Office of Management and Budget, Mid-Session Review, Fiscal Year 2011, Table 2 on page 9.
- The same table shows projected annual average unemployment rates are: 2013 = 7.1%, 2014 = 6.3%, 2015 = 5.7%, 2013 = 5.3%. The eight-year average is 7.5625%. Source: Office of Management and Budget, Mid-Session Review, Fiscal Year 2011, Table 2 on page 9.
- Clinton average is calculated from February 1993 through January 2001. Bush average is calculated using February 2001 through January 2009. Carter average is calculated using February 1977 through January 1980. Source: Bureau of Labor Statistics.
- “Rather than creating a false prosperity fueled by debt and passing the bills on to the next generation, we need to restore America to a pro-growth tax and fiscal policy,” Treasury Secretary Timothy Geithner, Remarks as prepared for delivery at the Center for American Progress, August 4, 2010.
- CBO estimates outlays/GDP ratios: 2009 = 24.7%, 2010 = 24.8%, 2011 = 25.4%, 2012 = 23.7%. These average to 24.65%. Source: Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for Fiscal Year 2011, Table 1-2 on page 5.
- Outlays / GDP averaged 19.6% during the Clinton Administration. Source: My post Comparing Obama Economics to Clinton economics. Note this table shows a lower average for President Obama’s average spending because it uses the Administration’s more optimistic OMB projections. For an apples-to-apples comparison here I’m using CBO numbers.
- CBO estimates deficit/GDP ratios: 2009 = 9.9%, 2010 = 10.3%, 2011 = 8.9%, 2012 = 5.8%. These average to 8.725%. Source: Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for Fiscal Year 2011, Table 1-2 on page 5.
- Source: My post Comparing Obama Economics to Clinton economics, which uses data from OMB’s Historical Table 1.2.
- Source: My post Comparing Obama Economics to Clinton economics. Revenues/GDP are projected to be lower during President Obama’s term because of the weak economy, but beginning in 2013 the top income tax rate will be higher than during the Clinton Administration.
- Debt held by the public on January 20, 2009 = $6,307 B. 2009 GDP = 14,119 B. Therefore debt / GDP = 44.67%. Assuming a linear GDP throughout the year, June 8th is 44.67% through the calendar year. Source: TreasuryDirect and Commerce Department, Bureau of Economic Analysis.
- I made an error here – it should be September 9th rather than September 24th. CBO projects debt held by the public at the end of CY 2012 = 11.579 T and projects 2013 GDP = 16.676 T. Therefore debt / GDP = 69.44%, getting to September 9, 2013.
- Source: Congressional Budget Office, CBO’s Budgetary Treatment of Treatment of Fannie Mae and Freddie Mac (January 2010), Table 2 on page 8.
- Source: Treasury’s “Green Book,” General Explanations of the Administration’s Fiscal Year 2011 Revenue Proposals, pp. 127-128.
- Source: Treasury’s “Green Book,” p. 131.
- Source: Treasury’s “Green Book,” p. i footnote 1.
- Section 5000B as added by Sec. 10907 of Public Law 111-148 (H.R. 3590), “Imposition of tax on indoor tanning services.”
- Section 701 of Public Law 111-3 (H.R. 2), “Increase in excise tax rate on tobacco products.”
- Section 9008 of Public Law 111-148 (H.R. 3590), “Imposition of annual fee on branded prescription pharmaceutical manufacturers and importers.”
- Section 9010 of Public Law 111-148 (H.R. 3590), “Imposition of annual fee on health insurance providers.”
- Section 9009 of Public Law 111-148 (H.R. 3590), “Imposition of annual fee on medical device manufacturers and importers.”
- Section 9003 of Public Law 111-148 (H.R. 3590), “Distributions for medicine qualified only if for prescribed drug or insulin.”
- Section 9015 of Public Law 111-148 (H.R. 3590), “Additional hospital insurance tax on high-income taxpayers.”
- Chapter 2A as added by Section 1402 of Public Law 111-152 (H.R. 4872), “Unearned income Medicare contribution.”
- Section 5000A(b) & (c) as added by Sec. 1501(b) of Public Law 111-148 (H.R. 3590), “Shared Responsibility Payment” and “Amount of penalty.”
- Sec. 1513 of Public Law 111-148 (H.R. 3590), “Shared responsibility for employers.”
- Source: Treasury’s “Green Book,” p. 129.
- Source: Treasury’s “Green Book,” throughout pp. 39-49.
- Source: The President’s Budget would establish “emissions allowances” from an economy-wide carbon cap. A cap-and-trade is economically equivalent to a carbon tax with some of the revenues raised rebated to carbon producers. Source: The President’s Budget, FY 2011, Table S-2, footnote 3 on p. 4.
(photo credit: White House photo by Pete Souza)