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Why Does U.S. Economic Performance Continue To Decline?

by Francis Menton     •     Manhattan Contrarian

Poor Economic Growth ObamaThe government’s latest GDP numbers, through Q2 2015, are now out, and they include some revisions to Q1, as well as other revisions for the period 2012 – 2014. Lenore Hawkins analyzes the numbers at Elle’s Economy, in an article titled “GDP Numbers Keep Getting Worse.” One consequence of the revisions is that Q1 2015 went from a slight decline to a slight increase. But the other revisions to earlier years, particularly 2012 – 2014, had the effect of lowering previously-reported GDP substantially:

In the 138 years from 1870 to 2008, the US economy expanded by about an average of 3% a year. After the revisions to GDP data from 2012-2014, we see that the U.S. economy since the financial crisis has been growing an average of 2.0% a year versus the earlier 2.3%. . . . Most importantly, 2010-2014 was weaker in every quarter except the second and 2015 so far has been the worst yet!

So why doesn’t the U.S. economy just get going like it always did in the past — even as recently as the decade of the 1990s and from 2001 – 2008? Could there be something different about the Obama regime?

Well, there is the fact that the Obama administration continues to conduct what I have called its War Against the Economy. As described in that article and elsewhere on this blog, that war has many fronts, including: massive wasteful spending and debt accumulation; artificially suppressing cheap and reliable energy in favor of subsidizing expensive and unreliable energy; overregulation and endless phony prosecutions directed against anyone who dares to make too much money in a financial business; forcing people to overpay for wasteful health insurance (Obamacare); big tax increases; and more. You would think they might let up on the war as the economy continues to languish, but in fact they just keep doubling down. I truly believe that Obama and his minions have no idea that there is any relationship between intentional suppression of economic activity by the government on the one hand and sluggish economic performance by the economy on the other.

So there was Obama yesterday announcing the final version of EPA’s so-called Clean Power Plan. This version has several changes from the prior proposal, including a goal to get rid of even more coal-based electricity generation, and new restrictions on shale gas. Since it takes years to change over electricity generation from one source to another, the coal industry has already been gradually going out of business for the past several years. So far it’s a hundred or so power plants closed, and tens of thousands of miners out of work. And now they’re going to force this to happen even faster! In his speech yesterday, Obama tried to claim the moral high ground by making the case for closing power plants on the basis of asthma. From Breitbart News:

President Obama defended his new draconian rules on coal fired power plants today, using a moral argument for battling back the dangers of climate change. As part of his argument for his new policies, President Obama insisted that more minorities were being hurt by air pollution. He argued that African-American children was more than twice as likely to be hospitalized from asthma and a Latino child was 40 percent more likely to die from asthma. “If you care about low income minority Americans, start protecting the air they breath. . . .”

So our President is so “smart” that he believes that CO2 in the air is a cause of asthma? Yikes! But then we also know that he believes that it’s a good idea for a government to borrow as much money as it can and waste it as fast as possible. Hey, Paul Krugman told him that. All the “smart” people know it! Anyway, in order to prevent young minority children from getting asthma from all that extra CO2 in the air, we are now going to intentionally jack up the price of electricity so that the underprivileged families can’t afford lighting and air conditioning any more. Because it’s the moral thing to do!

Richard Wellings of the Institute of Economic Affairs comments on Obama’s energy plans yesterday in The Telegraph, in an article aptly titled “Barack Obama’s green plans could cripple America’s economy.”

In much of the US, the power industry continues to rely on coal. Consumers in Kentucky, where over 90% of electricity is generated from coal, enjoy electricity prices roughly 50% lower than in the UK, an indication of the huge potential cost of Obama’s plans. Indeed much higher bills are almost inevitable now that the US is adopting EU-style policies. Carbon emissions from the power sector will be cut by an ambitious 32% by 2030 (compared to 2005 levels). Worse still, the Clean Power Plan will favour expensive renewable energy over the relatively low-cost option of cutting emissions by switching from coal to natural gas.

Actually Richard, the crippling of the American economy by the Clean Power Plan has been going on for quite a while already, because of the time it takes to change over power production, and because the utilities can’t take the chance of being caught out on the day the new regulations take effect. But then, that’s only a fraction of the intentional crippling that these people are inflicting. It’s what we call Obama’s “legacy.”