The question isn't whether things were better in 2008. They weren't. The question is whether Obama handled an unprecedented economic crisis competently or not
I've written before about President Obama's biggest first-term mistakes, and his top successes. Both need to be examined in the context of the economic catastrophe he inherited 44 months ago. But something else needs to be examined within this context, too: "Are you better off than four years ago?" — the question being constantly asked by Republicans over the last couple weeks.
The question — introduced into the political lexicon by Ronald Reagan in his successful 1980 campaign against Jimmy Carter — is entirely appropriate to ask of any incumbent. Thus: After (nearly) four tough years under President Barack Obama, are we better off? Republicans say the answer is a resounding no, that when Americans think about it they'll agree — and that Mitt Romney will become the 45th president of the United States.
But beware of unintended consequences. The question holds risks for Republicans, too, as it invites scrutiny of the economic collapse of the last decade and the man that (according to a June Gallup survey) 68 percent of Americans — even 49 percent of Republicans — mostly blame for it: George W. Bush.
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Republicans can rightly point to a record 46.7 million Americans on food stamps, the highest poverty levels in half a century, and 23 million unemployed or underemployed Americans. They can also point to a doubling of gasoline prices and a national debt that just this week hit the $16 trillion mark.
All this, among other things, is an ugly stain on the Obama record, and he may be joining the ranks of those unemployed come January 20, 2013.
Job growth nearly four years into the Obama presidency is still lousy. But it's better than the bloodletting of 2008.
But why, then, do 68 percent of Americans — and 49 percent of Republicans — continue to place most of the blame for our struggling economy on George W. Bush? This is where the four-year comparison comes into play.
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In August 2008, the number of unemployed Americans rose by 592,000, according to the Bureau of Labor Statistics. Non-farm payrolls fell by 127,000. The August 2012 jobs report is due Friday, and expectations are modest: A gain of just 130,000 non-farm jobs. Still, compared with four years ago, that's an improvement of 257,000 jobs. As for the rest of 2008, and the beginning of 2009:
Let's be honest: Job growth nearly four years into the Obama presidency is still lousy, mediocre, tepid, weak — pick your derisive adjective. But isn't it better than the bloodletting of 2008 and early 2009? Consider:
· In August 2008, the Bush administration bailed out Fannie Mae and Freddie Mac, the two government-sponsored mortgage entities. Cost to the taxpayers (so far): $124 billion. Put another way, that's roughly 238 Solyndras. Would you like to go back to 2008?
· In October 2008, the Democratic-dominated Congress approved a plan by President Bush and Treasury Secretary Hank Paulson to spend up to $700 billion to prop up the U.S. banking system, which was on the verge of collapse. Why $700 billion? "It's not based on any particular data point," a Treasury spokesman said at the time. "We just wanted to choose a really large number." (In the end, $428 billion was used.) Would you like to go back to 2008?
· In December 2008, as economic panic spread, General Motors and Chrysler, about to topple (and take their supply chains with them), received a $17.4 billion bailout from the Bush administration. Would you like to go back to 2008?
· Put all this together and the U.S. economy as a whole sank negative 3.7 percent between July and September 2008, before collapsing at an astonishing negative 8.9 percent rate between October and December. Would you still like to go back to 2008?
What about going back to 2007? That's no good. The stock market peaked that fall, and subsequently collapsed. By March 2009, the Dow Jones Industrial Average had lost 54 percent of its entire value, and the Standard & Poor's 500 Index had lost 57 percent.
Perhaps we could go back to 2006? Nah. That's the year the housing bubble burst. More than $7 trillion in home equity was wiped out, and because millions of Americans had little saved and a lot borrowed against the rising value of their homes, the real estate collapse left them devastated. Do you really think there's no connection between millions of people losing their homes — being underwater on their mortgages and unable to sell — and the subsequent rise in poverty and food stamps? If you do, then by all means, yes, let's get in the time machine and program it for 2008, 2007, or 2006 — you know, the good ol' days.
The question isn't whether things were better four years ago. They weren't. The question is whether Barack Obama handled this unprecedented crisis competently or not. Did he prolong it? Make it worse? That is a matter of legitimate dispute.
Here the Republicans have an opportunity. As I've mentioned before, Obama's problem — one of his many problems — is that he naively overpromised that he could quickly dig us out of this slippery ditch. "If I don't have this done in three years," he told NBC's Matt Lauer in February 2009, "then there's going to be a one-term proposition." It took Franklin Roosevelt a decade and a World War to lift America out of the Great Depression. If Obama constantly compared our downturn to that, why on earth would he say it could be fixed in just three years?
The president's advisors also overpromised, saying unemployment wouldn't go over 8 percent. (Their defense today: Things were simply far worse than they realized at the time.) It's usually better to underpromise and overdeliver, but that's not how you get elected.
To be fair, there was at least one thing that was better four years ago. Gasoline prices were plunging. From a July 2008 high of $4.11 (says AAA), they fell to $1.89 by the time Obama was sworn in six months later. That's what happens when the economy collapses — demand vanishes. Why was gasoline $4.11 to begin with? Because it soared 387 percent from 2002-08, before things fell apart. An economic collapse isn't the way you want to lower prices, and that's why Obama gets the rap for gasoline's 100 percent jump from that $1.89 level. The economy is slowly recovering, and so is demand.
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An award-winning member of the White House press corps, Paul Brandus founded WestWingReports.com (@WestWingReport) and provides reports for media outlets around the United States and overseas. His career spans network television, Wall Street, and several years as a foreign correspondent based in Moscow, where he covered the collapse of the Soviet Union for NBC Radio and the award-winning business and economics program Marketplace. He has traveled to 53 countries on five continents and has reported from, among other places, Iraq, Chechnya, China, and Guantanamo Bay, Cuba.
