While success still has many fathers, failure is no longer an orphan. President Obama’s recent speeches and rallies demonstrate that, now, failure is simply redefined as success. The costs from this revisionism is high. Creating false narratives encourage policies that will harm economic prosperity and impose large economic hardships on the lowest-income families.
Setting the record straight is, consequently, imperative.
The Obama presidency began as the Great Recession was ending. Obama’s policies had nothing to do with the recession, obviously, but they did meaningfully impact the recovery. And, here his record is uninspiring.
Adjusted for inflation, total economic activity in the U.S. grew 17.5% from the end of the Great Recession through the end of the Obama presidency. Excluding the short recovery between the double dip recession of 1980-82, this is arguably the worst recovery from a recession going back to the 1960s. Even the recovery under George W. Bush was stronger (the economy grew a total of 18.7% just prior to the Great Recession).
For comparison, the economy expanded 39.4% during the 1990s expansion under President Clinton; and 38.2% during the 1980s expansion under President Reagan. The 1990s expansion lasted 10 years, and the 1980s expansion lasted 8 years, which were both longer than the 7+ years of economic recovery under President Obama. Still, the shorter-time frame does not explain the large growth discrepancies.
Even more conspicuous, while the average quarterly growth since the end of the Great Recession and the end of the Obama presidency was 2.2%, it slowed to 2.0% in 2015 and 1.9% in 2016. Put differently, economic growth was decelerating as President Obama left office.
The distribution of the growth benefits matters as well. But here too President Obama’s record is uninspiring. The U.S. Census collects the average income data for households, dividing households into five income categories, as well as the top 5 percent of households.
The trends showed that as the Obama presidency was ending the lowest 20 percent of households were still struggling to regain their pre-Great Recession income levels, adjusted for inflation. Upper income households, on the other hand, had already regained their pre-Great Recession income levels back in 2013.
Furthermore, this discrepancy contrasted sharply with the Reagan and Clinton years. At the end of both of their terms, the average income for all income quintiles, from the poorest to the richest, were higher. Given Obama’s income inequality rhetoric, it is ironic that the lowest income households did not regain their pre-recession incomes during his presidency while the upper income households did.
The slower economic growth and widening income inequality that occurred during President Obama’s time in office was not a coincidence, nor simply bad timing. Yes, the Great Recession happened. But, his Administration’s profligate spending, regulatory mandates, and tax increases discouraged economic investment and capped the country’s growth potential. When coupled with the Fed’s expansionary policies that inflated the stock market, slow economic growth and rising income inequality was the inevitable outcome.
Starting in 2017, the regulatory assault on the economy ended. And, the corporate tax reforms made the U.S. corporate tax system globally competitive once again. Not unexpectedly, a growth pick-up in 2017 and 2018 occurred. The average quarterly economic growth was 2.5% in 2017 and 3.3% thus far in 2018 – substantially higher than the growth that occurred during Obama’s presidency, and a stark contrast to the slowing growth trend that was taking hold as Obama’s time in office was ending.
While the economy has responded as expected to the pro-growth developments, concerns certainly abound. The rising trade barriers and out of control federal spending are flashing bearish signals. Similarly, the Federal Reserve’s unprecedented monetary experiment still poses a threat to the economy’s health.
What is clear, however, is that Obama-nomics was not a success. It neither generated strong growth nor promoted income equality. As demonstrated by the rise of the democratic-socialist wing of the Democrat party, the failings of Obama-nomics have not been fully appreciated. By revising history, President Obama is encouraging wrongheaded policies, such as single payer health care and a $15 minimum wage, that will have devastating impacts on economic growth and will harm the lowest-income families the most.
Regaining the vibrant economy of the 1980s and 1990s requires that we learn the right lessons from history. Redefining the Obama presidency as an economic success does the opposite. It encourages us to learn the wrong lessons from history, and dooms us to relive their consequences.