President Obama has been doing some year-end boasting that under his administration—though, given his go-it-alone actions, “rule” is a more appropriate word—the federal deficit is down, unemployment has declined significantly and consumers are better off.
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The irony is that Republican policies deserve most of the credit for those improvements—policies Obama both fought and denounced.
The declining federal deficit. The federal deficit was $486 billion in 2014, the lowest it’s been since 2008, according to the Congressional Budget Office (CBO). The deficit reached $1.4 trillion in 2009, Obama’s first year in office. (Note: The annual federal deficit should not be confused with total federal debt, which is $18 trillion and has grown every year.)
While an improving economy increases government revenue, Washington also has to control its spending—and that’s what the sequester did. The sequester was a series of forced budget cuts, proposed by the Obama administration, only if Democrats and Republicans couldn’t come to a budget agreement. They couldn’t and the across-the-board spending cuts went into effect in March of 2013, even as Obama warned those cuts would kill the struggling economic recovery.
Republicans held firm, the cuts went into effect, and the economy started picking up steam almost immediately.
While across-the-board cuts is a terrible way to control government spending, at least it worked. Had Obama gotten his way, the government would have spent much more, robbing him of the photo-op asserting he’s responsible for the declining deficit.
The shrinking unemployment rate. According to the president at his year-end press conference, “The steps that we took early on to rescue our economy and rebuild it on a new foundation helped make 2014 the strongest year for job growth since the 1990s.”
The U.S. Bureau of Labor Statistics says the unemployment rate is now down to 5.8 percent. But it’s worth noting here that unemployment was 7.8 percent when Obama took office, rising to 10 percent only after a Democratic-led Congress passed his economic policies.
Very few people thought at the beginning of 2014 that we’d see a 5.8 percent unemployment rate by year’s end. One factor behind that achievement: Republican refusal to extend long-term unemployment benefits.
Normally, unemployment benefits last about 26 weeks. Due to the recession and slow economic recovery, Congress passed several extensions—eventually reaching 99 weeks—to give the unemployed more time to find a job. Those extensions ended last December.
Obama complained and Senate Democrats, with five Republicans, passed a five-month extension that would have kept unemployment benefits going through May, but House Republicans refused to bring the bill up for a vote.
There’s an old adage that the government gets more of what it subsidizes, and the government was heavily subsidizing unemployment. Without that extension benefit recipients had to find a job, even if it wasn’t exactly what they wanted.
Republicans took a lot of grief for ending those unemployment extensions, but it was the right policy.
Lower energy costs. And then there’s this Obama observation: “America is now the number-one producer of oil, the number-one producer of natural gas. We’re saving drivers about 70 cents a gallon at the pump over last Christmas.”
Give the president high marks for chutzpah. The most anti-fossil fuel president in U.S. history—the same man who will likely veto congressional approval of the Keystone XL pipeline in early 2015—is taking credit for the explosion in U.S. oil and natural gas production.
Republicans, especially in the states, have been the primary drivers for increased fossil fuel production, even as blue states—e.g., New York—ban fracking. These days, a ban on fracking is essentially a ban on drilling.
The growth in the fossil fuel industry has been one of the drivers of U.S. economic growth. Without it, the economy could have stalled and even entered another recession. And yet Obama is taking credit for the fossil fuel expansion, which he fought, and for lower gas prices, which are a result of the increased supply of fossil fuels.
In short, the conservatives guiding Republican policies and congressional efforts have made Obama and his economy look much better than it otherwise would. He should stand up and thank them, but, as usual, he’s taking credit for the results of the policies he opposed.