Recession Ends – Yet A Disaster for Obama

by John Tillman The worst possible news for President Obama is that the National Bureau of Economic Research said Monday that the downturn ended in June of 2009. Why a disaster for the president? Simple: As of June 2009, only $201.3 billion, or 25.6 percent of the total stimulus bill, had been awarded (not necessarily spent, as this...

by John Tillman

The worst possible news for President Obama is that the National Bureau of Economic Research said Monday that the downturn ended in June of 2009.

Why a disaster for the president? Simple: As of June 2009, only $201.3 billion, or 25.6 percent of the total stimulus bill, had been awarded (not necessarily spent, as this report can tell you).  Thus, 74.4 percent has been awarded since the recession officially ended. What that means is that the economy was already on its way to recovery long before the bulk of the stimulus dollars had begun to flow.  The natural, market driven healing process was working well…then it came to a halt even as the borrowed stimulus dollars were awarded in ever-larger amounts.

As if this disaster was not enough, the Fed trumped the Keynesian stimulus bill with a steroids approach to monetary expansion.  Through “quantitative easing,” the Federal Reserve expanded the money supply by $1.2 trillion in the first and second quarter of 2009—and they didn’t stop there.  Quantitative easing is a fancy term for printing money by adding dollars electronically to the Fed’s balance sheet that is then pumped into the financial system.

All told, this has been a massive Keynesian stimulus.  What are the results? Massive spending increases, massive debt increases, massive expansion of the money supply resulting in very slow growth and no job creation.

How can this be? President Obama and his acolytes in Springfield and Washington don’t understand a simple truth: jobs are created when entrepreneurs and investors pursue economic opportunity on the near term horizon.  When they see it, they invest and hire new workers to try and earn a share of the opportunity by serving customers well.

When, instead, they see increasing risk and uncertainty in the form of higher taxes, higher borrowing, higher spending and more burdensome regulations, they sit on their cash.  They don’t invest and they don’t hire.

The irony is that the recession ended in June of 2009 on the faith of businesses and investors that President Obama would not be hostile to free enterprise.  The public now knows that he is hostile to the very foundations of American free enterprise culture.  As the news sinks in that the recession ended in June of 2009, the president’s approval ratings will likely drop further and that spells looming disaster for his party on November 2nd.