by Leigh Bravo 8/7/14
Recently, President Obama told a British news magazine: “There’s almost no economic metric by which you couldn’t say that the U.S. economy is better and that corporate bottom lines are better. None.”
- Roughly 50 million native born, working age Americans are not working.
- 67% of children have one parent that is unemployed.
- The current unemployment rate is 9.6% (This includes the number of Americans who have dropped out of the market)
- The last time the labor force participation rate was this low was in 1978.
- Unemployment rate for 18-34 year olds is 46%.
- 3.9 million Americans are unemployed over 27 weeks.
- 3.9 million manufacturing jobs lost since Obama took office.
- Over 721,000 “Shovel Ready” jobs lost since 2008.
- In July 2014, part time jobs increased by 799,000 while full time jobs fell by 523,000.
- 53% of American workers make less than $30,000 a year.
- The U.S, poverty rate has increased to 16.1%, higher than when the “War on Poverty” began in 1965.
- Median household income in American has fallen for four straight years with an overall decline of $4,000.
- In 2008, student debt was at $440 billion. Today student debt is over a $1 trillion.
- Gas prices have increased 79% under Obama.
- The average increase in insurance rates since Obamacare was implemented is $3,671, with deductibles ranging from $6,000 to 15,000.
- Over 5 million Americans have lost their insurance due to Obamacare.
- Over 47 million Americans are on food stamps.
- The U.S. Census reports that over 100 million Americans are enrolled in at least one welfare program.
- In 2008, the U.S. debt to GDP ration was under 70%. Today that has jumped to 110%.
In the same interview with a British news magazine, Obama said,
“I would take the complaints of the corporate community with a grain of salt. They always complain about regulation, that’s their job.”
Is this statement true? Has small business been affected negatively by the number of regulations imposed by the Obama Administration?
The Regulatory Flexibility Act directs federal agencies to assess the effects of rules and regulations on small business. Obama has actually issued fewer regulations for business than Bush, however, the regulations he has enacted have impacted small business more then any enacted by Bush. Therefore, the most important question is not how many regulations have been implemented, but how good are they and do they help or hinder the economy?
In 2012, alone, the American Action forum said,
“The cost of regulations has added tremendous costs to the economy and finds that the year 2012 tops every year in the past twelve in terms of final rule cost.”
Reported in Forbes in March of 2013,
“Small business is still in recession. The number of startup jobs has fallen 30% below the Bush and Clinton eras. The rate of new business formation in the US has fallen to a record low. The reductions in small business employment during 2008 and 2009 were the largest ever recorded in the history of the National Federation of Independent Business data series. Now, four years after the supposed “recovery,” small business is no better off.
Federal government employment has grown and most big companies have recovered. However, 1 in 5 small firms expect to drop employees and 1 in 3 expect to decrease capital spending and expect to be in more severe cash flow troubles by the end of the year.”
What has caused small business growth to remain stagnant? Let’s begin with Obamacare, over-regulation, high corporate tax rates, and the Federal Reserve’s giveaways to “too big to fail” financial institutions. Did you know that the top four “big banks” control over 40% of the credit markets? Did you know that this percentage has grown over 10% since Obama took office? With the passage of Obama’s Dodd-Frank law, there are over 330 fewer small banks and the volume of business loans under $1 million fell 13%.
A new study by the Brookings Institute indicates that businesses are shutting down faster than they are opening. The US economy has become less entrepreneurial over time, but the drop since 2006 is disturbing.
“The level of business deaths kept growing along with the overall level of business in the economy, but the level of business births did not- it held relatively steady before dropping significantly in the recent downturn. In fact, business deaths now exceed business births for the first time in the thirty-plus-year history of our data.”
A growing economy is necessary for newer and smaller businesses to form and since the economy is not growing, there are many businesses that may never have the opportunity to start up. The Obama presidency has been good for larger firms and those with connections in Washington. The higher tax rates do not impact large business as much as it does smaller business. So under Obama, we have seen big government and big business thrive while small business, the real driver of job creation and the economy, has been further depressed through higher regulation, higher taxes, and higher healthcare costs because of Obamacare.
Obama’s 2009 stimulus did little to stimulate private sector jobs, but gave massive funding to state and local government jobs. Private sector jobs in 2012 were down by 4% from January 2008, however federal employment was actually up 11.4%. The United States Bureau of Labor Statistics (BLS) reported in March that employing government workers costs 45% more than an equivalent private sector worker. Government workers average 33% higher pay and their pension and retirement benefit costs are now 254% higher as well. The total compensation for government workers is now 45 % higher than the private sector, which partially explains why the federal debt has more than tripled to 110% of GDP.
In July 2014, Janet Yellen, Federal Reserve chairwoman, told Congress,
“Too many Americans remain unemployed, inflation remains below our longer-run objective and not all of the necessary financial reform initiatives have been completed.”
So what is the truth? In the past, new business bailed out the economy and spurred innovation and new jobs. Without these small businesses, and an economy dominated by big government, big money and political favors, the free enterprise system that the United States has enjoyed since its foundation will never recover.
Leigh Bravo blogs at The Trumpet.