Leaves are falling, back-to-school sales ended with a whimper, some 54,000 more jobs disappeared during the summer, and President Obama's stock is so low his PR operatives had him attend church for a photo-op this past Sunday - 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 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.
A standard definition of an economic depression, as opposed to a recession, is that the GDP decline by more than 10 percent and that it last two years or longer. Our current "Great Recession" qualifies. But the "D" word has not been used since Presidents Hoover and 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 GDP bouncing up about 8 percent before retreating. Each time investors thought the worst had passed. In this Great Recession 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.
Last month Senator Michael Bennet, D-CO, 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, the Governor ordered 6.5 percent cuts for all departments effective October 1. Governor 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 to 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]]