It’s not just the economic numbers that are looking up for President Obama. A new New York Times/CBS News poll puts his approval rating at 50 percent, his highest mark since May 2010 (except for a brief bump after Navy Seals killed Osama bin Laden in May). That’s a couple of points better than the RealClearPolitics average as displayed in the above chart, but the uptrend is clear.
Now, let’s assume the economy continues to grow—not gangbusters, but something along the lines predicted by economists in the recent Wall Street Journal survey. We’re talking slow-but-steady 2.5 percent GDP growth and a slowly falling unemployment rate of 8.0 percent by year’s end. That level of unemployment, by the way, is about what White House economists are predicting, along with average monthly job growth of about 167,000. Subpar numbers, but a lot better than what we saw in 2011: 1.7 percent GDP growth, average unemployment of 9 percent, and average monthly job growth of about 150,000.
With the recovery ever-so gently accelerating, what would be the Republican argument—fair or not—that Obama doesn’t deserve reelection? Maybe something along these lines:
1. Better but not nearly good enough. The pace of the Obama Recovery has been only about half that of other post-WWII recoveries. Sure, the unemployment rate has fallen to its lowest level since Obama took office. But that’s in good part due to a massive collapse in the size of the labor force, not rapid job growth. Income growth is still tepid at best. And just look at the housing market! You call this a recovery!? It’s still mourning in America, at least the part outside of Washington and Wall Street. Obama’s stagnant, declinist New Normal is unacceptable for the Last, Best Hope on Earth.
And many voters might agree. A recent survey of consumer sentiment found expectations about the job market at the highest levels in the history of the survey. There’s lots of room for disappointment here.
2. The Big Spend was a Big Bust. Obama’s policies don’t deserve much, if any, credit for the weakest economic recovery since the Great Depression. Obama’s signature economic achievement is the trillion dollar stimulus. In Money Well Spent? — The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History, journalist Michael Grabbel notes that Vice President Joe Biden said the stimulus would “literally drop kick us out of the recession.” But Grabell concludes that the “poorly designed” stimulus “ultimately failed to do what America expected it to do — bring about a strong, sustainable recovery. The drop kick was shanked.” Indeed, it was only after stimulus money dried up that the economy began to perk up. And economies eventually will recover on their own, and recover more quickly, if government empowers the private sector rather than trying to usurp it. See: Reagan Recovery.
3. The recovery isn’t “built to last,” not with all that debt. Obama added $5.3 trillion to the federal debt to juice the economy—and this is the best his old-fashioned Keynesian policies could do? You could call it a “sugar high,” but it doesn’t even qualify as a sugar buzz, really. And now Obama wants to add another $7 trillion in a second term, according to his new budget, just to keep the wheels grinding along. The “built to last” economy is a “built on debt” economy and thus unsustainable. Just ask the Europeans.
4. Obama is President (Didn’t) Fix It. When Obama came into office, healthcare and other social insurance spending were on a trajectory to bankrupt America, banks were too big to fail, and the tax code was stifling American competitiveness. And which of these problems has been solved or substantially dealt with? None. The healthcare cost curve wasn’t bent, banks are bigger than ever, and Obama’s investment and corporate tax hikes are about manufacturing fairness rather than growth or jobs.
5. Obama wants to “win the future”—with crony capitalism. It was government meddling in the private sector that created the housing bubble and financial crisis. But rather than learn that lesson, Team Obama wants to double down on “state capitalism,” whether through new policies to try and reinflate the housing market or venture socialism/industrial policy in the “clean energy” sector.
The primary purpose of state capitalism, whether in Beijing or Washington, is to cement political power, not produce economic growth. What did Obama do after passing the stimulus in 2009? Next up was massive regulation of healthcare and Wall Street. State capitalists fear Schumpeterian creative destruction because they cannot control it or squeeze campaign contributions from it.
Economic freedom, on the other hand, creates prosperity by unleashing the imagination of the individual and rewarding his or her effort. As analyst Ian Bremmer puts it, “Creative destruction invests liberal capitalism with a self-regenerating dynamism. … Human beings value opportunities to create prosperity for themselves and their families, and free markets have proven time and again that they can empower virtually anyone.” Crony capitalism only empowers politicians, bureaucrats, and entrenched interests.
Would voters find these arguments persuasive? With the economy humming along at 4 percent growth and unemployment under 6 percent—both White House 2012 predictions back in 2009—maybe not. But in Stagnation Nation? They just might.