Leaves are falling, back-to-school sales ended with a whimper, some 54,000 more jobs disappeared during the summer and President Barack Obama’s stock is so low, his PR operatives had him attend church for a photo-op recently — a safe Episcopalian service.
In June, Ron Sims, former King County executive and now an Obama administration toady, said, “There are Recovery Act-funded projects breaking ground across the country that are creating quality jobs for Americans and economic growth for businesses, large and small. This summer is sure to be a summer of economic recovery.”
The administration is setting some Recovery Act records. The public debt equals 62 percent of the total economy, up from 40 percent two years ago and on its way to being 146 percent of the GDP (gross domestic product) by 2030, according to the Congressional Budget Office.
Consumer confidence continues to slide. The GDP dropped to 1.6 percent, and more people are now receiving federal government benefits than are paying taxes.
Not a depression
A standard definition of an economic depression (as opposed to a recession) is that the GDP declines by more than 10 percent and that it lasts two years or longer. Our current “Great Recession” qualifies.
But the “D” word has not been used since Presidents Herbert Hoover and Franklin D. Roosevelt adopted policies of high taxes, high government spending and expanding government to turn a recession into the Great Depression of the 1930s.
During the Great Depression, the market rallied six times, with the GDP bouncing up about 8 percent before retreating. Each time, investors thought the worst had passed.
In this Great Recession, the GDP has rallied three times so far, but the rallies are averaging only about 3.5 percent.
America was the last to recover from the Depression and did so only when World War II started in Europe.
Roosevelt’s Treasury secretary, Henry Morgenthau Jr., said, “We have tried spending money. We are spending more than we have ever spent before, and it does not work…. After eight years of this administration, we have just as much unemployment as when we started — and an enormous debt to boot!”
Markets did not return to pre-Depression levels until the 1950s.
What history would say
Last month, Sen. Michael Bennet (D-Colo.), said, “We have managed to acquire $13 trillion of debt on our balance sheet. In my view, we have nothing to show for it.”
Not true: We have borrowed $9 million to buy signs saying how well the stimulus is working.
History tells us that government policies are prolonging the recession and making recovery difficult. Politicians in Olympia and D.C., continually surprised by “unexpected” economic news, seem to be unaware of the history. In the meantime, we ride what Jon Stewart calls the “Empty Pocket Express to Hobo Junction.”
At home, this means that the state’s tax take for the current budget period is $520 million below projections.
Before leaving on an Asian junket, Gov. Christine Gregoire ordered 6.5-percent cuts for all departments effective Oct. 1. Gregoire campaigned in 2008 saying talk of budget deficits were just Dino Rossi’s lies; now, she faces a $4.5 billion deficit in the next biennium.
The city’s financial underpinnings are sinking in the same way with some $56 million in cuts needed in the next budget period.
If the Democrats maintain their stranglehold on the Legislature, will they continue to reward the public employees and the few special interests that fill their campaign coffers or work for a healthy private sector?
If you don’t know history, you might guess the latter.
That also means you, too, will be surprised each time more “unexpected” economic news is in the headlines.[[In-content Ad]]