The United States may be “officially” out of the Great Recession, but the economy still faces serious structural problems. Most of these structural problems are a result of poor public policies that are placing an albatross over the economy. The problems of high unemployment, high national debt, massive increase in regulations, and other policies such as the Patient Protection and Affordable Care Act are the direct cause of today’s poor economic recovery.
In August the unemployment registered at 6.1 percent, but the actual rate is much higher because of the number of Americans who are either underemployed or have altogether quit looking for work. Economist Peter Morici wrote that “the official jobless rate is down to 6.1 percent but real unemployment is closer to 18 percent…” 92.3 million Americans are currently looking for work, and this “recovery” is the worst since World War II. James Sherk, a Senior Policy Analyst at The Heritage Foundation, argues that “despite some real improvements over the past several years, the economy remains painfully weak for millions of Americans.” In addition, Sherk states:
Moreover, other labor market indicators confirm the economy remains in the doldrums. Average weekly hours remained flat at 34.5 hours a week — the same level as in February 2013. Employers apparently see no need for longer hours or more overtime. Average hourly wages have grown just 2.1 percent over the past year — barely keeping up with inflation. The labor market appears relatively slack.
Americans are not only struggling to find fulltime jobs, but also with wages in decline there is a substantial increase of individuals and families who are becoming dependent on government aid/welfare programs. Investor’s Business Daily noted that information from the Federal Reserve demonstrates “that only the top 10 percent of American earners have seen their incomes rise under [President] Obama.”
“Despite 0 percent interest rates, $7 trillion in added debt, more than $1.5 trillion in stimulus, and the Fed creating more than $4.5 trillion in new money out of thin air, our economy just stumbles along,” noted an Investor’s Business Daily editorial. Terence Jeffrey, Editor in Chief of CNSnews, recently wrote that the national debt is $17.6 trillion and since January 2009 when President Barack Obama assumed the presidency the debt has increased by $7 trillion.
The debt situation represents a serious problem for not just the future of the national economy, but also represents a serious national security risk for the nation. Terence Jeffery outlined the threat of the debt, which is being fueled by out-of-control spending and the welfare state:
If current laws are not changed, 25 years from now (in 2039) the federal government will spend 6.3 percent of gross domestic product on Social Security alone, the CBO [Congressional Budget Office] estimated. That same year, it will spend 4.6 percent of GDP on Medicare, 3.4 percent on Medicaid, the Children’s Health Insurance Program and Obamacare subsidies, and 4.7 percent on net interest on the federal debt. Together federal spending on just Social Security, the major health programs (Medicare, Medicaid, CHIPS, and Obamacare), and interest on the debt will equal 19 percent of GDP, the CBO estimates. That is before the federal government spends a penny on food stamps, public housing, the Department of Education or the Environmental Protection Agency. It is also before the federal government spends a penny on national defense or the State Department, which carry out its core constitutional responsibilities.
The Patient Protection and Affordable Care Act is also contributing to the current economic crisis. Avik Roy, writing in Forbes, described three facts on how the Affordable Care Act is harming the national economy:
1. Obamacare is one of the largest tax increases in U.S. history;
2. Obamacare increases the cost of employing workers;
3. Obamacare’s exchange subsidies encourage many workers to drop out.
“Over the next decade, Obamacare increases taxes by more than $1.2 trillion: one of the largest tax increases in U.S. history, and the largest in nominal dollars,” argues Roy. The mandate under the Affordable Care Act is also causing many businesses to pull back on hiring fulltime workers, and as Roy wrote, “16.9 percent of service firms and 21.6 percent of manufacturers said they would be reducing their workforce due to Obamacare.”
The economic crisis will continue unless Americans reject the current policies that are emerging and come to the realization that the welfare state must be trimmed back and reformed. Our most urgent need is a restoration of constitutional government as represented by lowering spending, paying down the debt, eliminating regulation, and lowering tax rates. These policies along with promoting a strong dollar and an American-first trade policy will resurrect a strong national economy. Our history has proven this during periods of economic prosperity and President Warren G. Harding, Calvin Coolidge, and Ronald Reagan formula for a strong economy.
Republished by permission from INSTITUTE BRIEF, a publication of Public Interest Institute.