The most important issue in this election is the economy and jobs. Unfortunately, President Obama has demonstrated time and again a fundamental misunderstanding of how the economy works, the sources of its problems, and how to restore rapid growth. The question voters need to answer between now and Election Day is, if things continue on their current course, will you be better off in the future? If the answer is no, you should vote to change course.
The economy today is stuck in malaise.
About one-fifth of the workforce today is unemployed, under-employed (i.e., working part-time rather than full-time), or has stopped looking for work.
The median household income has fallen by $4,000.
The economy has created about 400,000 more jobs than it has lost since the president’s inauguration.
Average annual GDP growth since 2009 has been 1.5 percent, compared to the post–World War II average of 3.3 percent.
America deserves better, and past presidents have succeeded where President Obama has failed. Under President Reagan, for example, the U.S. confronted a severe recession in 1981–82, where unemployment soared to 10.8 percent. But in 1983, unemployment dropped 2.5 percentage points and GDP growth was 4.5 percent. In 1984, Reagan’s reelection year, unemployment fell another 1.1 percentage points while GDP soared to an eye-popping 7.2 percent. Meanwhile, GDP growth in year three of the Obama presidency was 2.4 percent, and so far this year it has been a paltry 1.7 percent.
The difference lies in economic policy. President Reagan sought to lower government barriers to private-sector production and to encourage economic risk-taking. His policy mix was to cut tax rates, to strengthen and stabilize the dollar, and to reduce stifling regulation. The boom of the 1980s, after the disastrous stagflation of the 1970s, is one of the great success stories in economic policy.
Now consider President Obama’s policy approach.
Taxes: The president’s insistence on raising taxes sharply on many small businesses and investors, despite high unemployment, hangs like a Sword of Damocles over the economy and runs counter to every major school of economic thought from Keynesian to supply-side to Austrian. The president’s refusal to make a bipartisan deal to lower the corporate-tax rate — the U.S. rate is the highest among developed nations — confirms his lack of interest in reducing tax rates.
Obamacare: As the U.S. Supreme Court confirmed this summer, Obamacare amounts to a $1.7 trillion tax increase over a decade, much of it on lower- and middle-income Americans and small companies. No wonder employers have been slow to hire new workers.
The dollar: President Obama has presided over a substantial dollar decline against gold and other commodities, and a highly unstable dollar relative to other major currencies. The volatile dollar distorts investment, reduces business confidence, and hampers international trade.
Dodd-Frank: The massive financial regulation bill contains a blizzard of new regulations and costs for banks, most of which have nothing to do with the issues that led to the mortgage bubble and financial crisis, and it does nothing to resolve Too Big to Fail. Due to rising compliance costs from Dodd-Frank, consumer bank fees are rising.
Other regulation: On top of Obamacare and Dodd-Frank, additional Obama-era regulations from agencies such as the Environmental Protection Agency and the National Labor Relations Board have increased costs for businesses. According to the Heritage Foundation, the total cost of regulation from the first three years of President Obama’s presidency is five times greater than the comparable period under George W. Bush.
Energy: The Obama administration has reduced substantially the number of oil and gas drilling permits issued, restricting energy production from Alaska to the Gulf of Mexico, while increasing regulation on the coal industry. The president’s decision to block the Keystone XL pipeline not only hurt domestic workers but made the U.S. more dependent on oil from hostile nations. Meanwhile, Mr. Obama’s subsidies to green energy companies have yielded little in the way of new technology but have created costly boondoggles such as Solyndra.
Debt: The president’s only real approach to economic growth is government spending. His $800 billion stimulus failed to spur a strong recovery, and the total national debt has soared to $16 trillion from $10 trillion on his watch. Yet, the president now proposes significant new spending in his second term on “nation building” at home, i.e. more government workers and increased dependency on government in place of a growing private sector.
On crucial budget issues such as entitlement spending, President Obama has been worse than AWOL. We know thanks to Bob Woodward’s new book that the president blew up budget talks with Republican leaders; he has ignored his own Simpson-Bowles debt commission; and he has allowed his party in the Senate to go three years without passing a budget.
In sum, rather than take the proven path to economic boom — the path of Reagan, as well as Jack Kennedy in the Go-Go 1960s and Calvin Coolidge in the Roaring ’20s — that reduces the cost of work and investment, President Obama has willfully added huge new costs and red tape on business, proposes a major tax increase starting on January 1, and has presided over a highly unstable dollar.
One approach works; one doesn’t. We can do better.
— Ted Cruz is the Republican candidate for the U.S. Senate from Texas.