EDITORIAL: Obama shafts the economy

OPINION:

America’s economy is trapped. While the recession technically has ended, few people can see daylight from under the mountain of unnecessary spending and red tape that’s piled on over the past 22 months. So long as President Obama refuses to acknowledge that these policies are digging us in deeper, there’s little hope for rescue anytime soon.

“So there’s a lot of anger and there’s a lot of frustration and a lot of fear across the country,” Mr. Obama said Tuesday at a George Washington University town-hall meeting. “And one of the challenges of this election is to make sure that we understand that as difficult as things are and have been over the last two years, we are moving in the right direction.”

That direction is an expansion of the government sector relative to the private sector. Neither the White House nor congressional Democrats have the willpower to say no to any expensive new proposal. In his Tuesday remarks, Mr. Obama checked off his accomplishments, which amounted to spending more on government-run health care, spending more on education and spending more on so-called clean energy.

This spree carries a big price tag. The Congressional Budget Office noted last week that the budget deficit for fiscal 2010 was $1,291,000,000,000. To put that in perspective, each individual taxpayer will be responsible for $9,200 of that amount. That’s on top of 2009’s reckless spending, which came at a cost of $10,000 per taxpayer. Excluding changes in the level of bailouts for Fannie Mae, Freddie Mac and Wall Street, federal spending accelerated 9 percent this year.

Compare that to the latest available Bureau of Labor Statistics (BLS) data, which show that consumers cut back their own spending 2.8 percent last year - the first such drop since records were first collected in 1984. The big government expansion has failed to fuel the employment growth promised by Mr. Obama’s economic advisers.

To the contrary, long-term unemployment is off the charts. As of the second quarter of this year, 46 percent of the nation’s 14.6 million unemployed had been without a job for more than 27 weeks. Long-term unemployment typically increases during a recession, but the present conditions are unlike anything found in the 65 years since the BLS began tracking unemployment duration. While private-sector employment has dropped 7 percent below the pre-recession peak, state and local governments have trimmed just 1.2 percent from their payrolls, according to the New York State University at Albany’s Nelson A. Rockefeller Institute of Government. The net result is a dramatic shift in the composition of the work force in favor of the unproductive sector.

This has not been a change for the better. Because Mr. Obama’s policies have demonstrably failed, it’s time to abandon the “hope” and bring on a pro-growth agenda of free trade and reductions in taxation and regulation. When entrepreneurs can keep the rewards for risking their capital on new business ventures, they will make the investments that create real jobs. Unless the president sees the light, be prepared to be trapped for another 26 months.