What We Got With Obama/Halting The Economic Collapse

First published in July 2013


What We Got With Obama/Halting The Economic Collapse

Barack Obama has now been president for four and one half years. So what about him? What of the comparisons of Obama to Franklin Roosevelt, at least early on? I will be doing "at least" two parts to this evaluation of President Obama, a man we now know far more about now than we did in 2008, but we tend to learn more about any president after they've been in office for awhile. Chester Arthur became president upon the assassination of President James Garfield in the early 1880s.* Arthur had developed his political career through the (then) Republican political machine in New York.** To the surprise of both machine politicians and reformers alike, as president, Arthur pursued reform policies that went completely against his former support of the corrupt existing spoils system. While Barack Obama still has more than three years left in his second term, where is he now, and what did we get in 2008 and again in 2012?

First, it is important to remember, Barack Obama had a fast rise in American politics, with his first elected office being as a state senator in the Illinois State Senate in 1996, a position he retained until 2004, when he was elected by a large margin to the United States Senate from Illinois. He experienced one bump in the political road, that being a failed run for a congressional seat, when he was decisively defeated in the Democratic primary by the incumbent. He held his U.S. Senate seat until just after he was elected President of the United States in November 2008. Obama came to the presidency at a time when the country, and indeed the world, were reeling from a major economic downturn and financial crisis. Further, many Americans had grown weary, and downright skeptical, of the war in Iraq, as that war had overshadowed the war in Afghanistan and the search for Osama bin Laden, the overall leader of Islamic terrorist group Al Qaeda. More than anything, Americans were worried about the economy, which had been in a major plummet since the fall of 2008, complete with bank failures and skyrocketing unemployment. For my Republican friends who like to believe that without the economic collapse, John McCain may have won the 2008 election, I just want to say, "if" there hadn't been a Great Depression, Herbert Hoover likely would have won a second term. Anyway, here's my take on President Obama:

Due to the circumstances when he took office, President Obama was often compared to Franklin D. Roosevelt, aka "FDR" (from here on, I'll use "FDR" when mentioning Roosevelt). First, it's never completely fair to compare presidents, because they never all have the same challenges nor the same circumstances during their time in office. FDR took office after 3 1/2 years of an economic collapse the likes of which the country had never seen. Unemployment was around 25%, there were many other workers on part time, and prices were falling, as major deflation gripped the nation. Further, when FDR took the oath of office, the country was in the midst of a major bank panic. FDR and his advisers had had those 3 1/2 years of the Great Depression to see how Herbert Hoover tried to deal with the collapse. FDR's advisers liked some of Hoover's programs and plans in general, but they did not like Hoover's limitations and implementations of his programs. They took many of Hoover's ideas, but they reformulated them to their own ways of thinking.

Barack Obama came to office as the economy was still plunging downward at an alarming rate. The recession which started in late 2007 had taken on ominous proportions in the fall of 2008, as the nation's banking and overall financial system, overwhelmed by massive numbers of bad mortgages, wavered and threatened to come crashing down; thus bringing about what later came to be called, "the Great Recession." Obama and his advisers didn't have quite the "luxury" of watching George W. Bush trying to deal with the collapsing economy on the scale that FDR had watched Hoover, but Obama did have an advantage unavailable to FDR ... HISTORY. The incoming Obama administration knew from the history of the Great Depression and the time thereafter how to try to stem an economic collapse. Federal Reserve Chairman Ben Bernanke also knew the history of the Great Depression, as he had made it a part of concentrated effort in his educational studies. The answer was ... SPENDING. While they knew the answer, the problem was, the Bush administration had run huge deficits for years; cutting taxes (especially for the wealthiest Americans), fighting wars, adding a prescription drug benefit to Medicare, and shoring up the security of the U.S. after the 9/11 attacks. As I noted, Bush cut taxes, and Americans were never asked to help pay for all of the the new spending during his two terms as president. In spite of Republican attempts to act as if the history of federal deficits began on January 20, 2009, the day Barack Obama took office, George W. Bush bequeathed a federal deficit of more than a trillion and a third dollars to Obama on that day. This meant the Obama administration would have to TOTALLY borrow the money to combat the economic plunge the country was experiencing. The Bush administration initiated bailouts for the auto industry and major bailouts for the American banking industry, fearful it would collapse. The bank bailout law allocated a maximum of $700 billion.*** The auto bailouts were much smaller and were done to tide the companies over until the new administration came into office. For the banks, through other maneuvers in addition to the bailout law, the Federal Reserve provided trillions of dollars (I'm not sure we actually know to this day how many trillions). Bernanke, a Republican appointed to head the Federal Reserve by George W. Bush, advocated major spending by the federal government, at one point saying that the threat of deflation (generally falling prices such as happened during the Great Depression) had to be combated, even if money had to be dropped out of airplanes.

Here's the idea behind Bernanke's statement and the general idea of spending to combat an economic downturn. During the Great Depression so many Americans had little or no money, there was a lack of demand for goods and services, which only brought more layoffs and business failures; that is, a downward spiral. Government spending tried to make up some of the loss of purchasing power, but back then, this was all something of a new theory, and it took study of the lessons of the Great Depression to put the ideas into a more concrete plan of action for the future. As I mentioned earlier, Bernanke had done significant study of the Great Depression through much of his life and he used this knowledge to combat the Great Recession, along with support for the Obama administration's efforts, including up to the present about the federal budget. Some Republicans and business people screamed, shouted and stomped their feet in protest to the Bernanke and Obama anti-recession program, much like some Republicans, some conservative Democrats and business people screamed, shouted, and stomped their feet against FDR in the 1930s. In my opinion, the business-type ideas that have developed over the centuries and the idea that they can never be wrong has just been carried to extremes by some. Of course they screamed and shouted, and I'm sure many American bankers did the same, until THEY needed their asses bailed out. The idea is, to be quite honest, when Uncle Sam dispersed money during the Great Depression, the greediest of the greedy didn't have direct access to much of that money, as some went to provide public service jobs in a variety of ways, so they called it "wasteful," and .... they screamed, shouted and stomped their feet in a tantrum. Folks, they want YOUR MONEY! That's what all of this kind of stuff is about, including all the nonsense about privatizing Social Security, Medicare, Medicaid, or any government money. They want their cut! If you get help in some way from government, at whatever level, federal, state or local, they're pissed, because they didn't get their cut. Government can go around them and they don't like it.

President Obama kept and generally adhered to the bank bailout law, signed into law by President George W. Bush. Further, the Obama administration proposed a "stimulus package" of about $800 billion to inject money into the economy through tax cuts and public spending, and they got larger bailouts for General Motors and Chrysler in the auto industry. In return, Uncle Sam took stock in the auto companies, a move which brought cries of "socialism" from the political right, as if the sun would never shine again. As I type this, I can't look out the window, because the sunlight is too bright. Further, the auto companies agreed to reorganize, in part by a scale back in the number of vehicle models they had. Gradually the economic plunge began to slow and the economy stabilized, although it faced strong headwinds from the oil spill in the Gulf of Mexico, which shut down a fairly large sector of the economy, as first the spill and then the clean up proceeded. Republicans pounced, but I believe most Americans realized the oil spill had damaged not only the Gulf coast, but the entire American economy. At least I didn't hear Americans echoing what Republican Congressman Joe Barton said in a public hearing. The Congressman said that the deal reached between the Obama administration and BP for the oil giant to put $20 billion into a fund for compensation to victims of the disaster was a "shakedown" of BP by the White House and he apologized to BP for such!

The economy has continued to recover to this day, but the pace has been slow to steady, not overwhelming, and unemployment has gradually dropped into the mid 7% range. Part of the slow recovery, in my opinion at least, has had to do with the scale back of state and local governments hard hit by the recession and the corresponding revenue drop, at least until more recently. Private business began rehiring, albeit slowly, but simultaneously state and local governments cut payrolls, often making for something of a trade off. It's also important to remember, that while the Great Recession pales in comparison to the Great Depression of the 1930s, it took until about 1941 to fully recover from that depression, which started in 1929! Of course, if you've been out of work for a couple of years, it doesn't matter how much we compare our recent history with the 1930s, YOU'RE HURTING, and neither history nor statistics does anything for you. Another thing is, many American business people, always driven by the bottom line, prefer to invest in their business facilities in other countries. This is not a one way street, as American-made products are also sold to other countries, but when American companies choose to produce goods they once made here in overseas locations and then ship those products back here, it hurts! They also seem to keep money in banks outside of the U.S., so as not to have to pay taxes on it. Now you can say that's smart, but America continues to crumble, and while you might like some of those low prices you get for certain foreign made products, we'll see how well you like working for foreign wages. Eventually that's what's going to happen for many. Why do you think Romney didn't want to release much information on his income and taxes? Whether he did anything illegal, I can't say, but I'm sure it was because he knew how bad it would look. They always like their scamming the system to get tax breaks and such, until they have to face the American public, then they don't want you to know, because they know exactly what you're going to think, so they've got to hide it from you.

So on combating the Great Recession, I'd give President Obama a "B+," but there are other things tied to the economy I'll be covering in the next installment and his grade may not be so high.  

* President Garfield was born in what was to later become suburban Cleveland, Ohio. He is buried in Cleveland at Lake View Cemetery, located by the Little Italy neighborhood in the general area of the University Circle section of town. For those interested: http://www.universitycircle.org/

** Both parties had political machines in New York and elsewhere, so this was not just Republicans.

*** All of the 700 billion was not dispersed to financial institutions, and Congress (Democrats then controlled both houses) and the Obama administration lowered the total amount to $475 billion from the $700 billion. The U.S. Treasury reports on the money to Congress, and the report from earlier this year indicates that only $418 billion was actually dispersed, and that the Treasury has received $405 billion in return, leaving a relatively small balance yet owed. The "incoming" money has come from a variety of sources, including dividends and interest, but the biggest amount by far has come from companies paying back the money they received. The auto industry got about $80 billion total and currently about $51 billion has been returned to the Treasury. 

WORD HISTORY:
Pimento-This is a really interesting word. Watch how and why the meanings evolved over time. This word goes back to Indo European "peig/peikh," which meant "to cut, to carve," the notion of which led to "to carve decorations into an object." This gave its Italic/Latin offspring "pingere," and the idea of "decorate or adorn" broadened further into "decorate with color;" thus came the meaning, "to paint." This then spawned the Latin noun "pigmentum," which meant "color, paint," but also later it took the meaning "vegetable juice," because of the bright color of the juice. Vegetable juice was often added to foods for color and flavor, and  Spanish, a Latin-based language, had its version of the word as "pimenton," which made the "vegetable juice" meaning into the more specific "red pepper," but this later broadened into "sweet peppers of any color." The idea of using peppers to season food also gave Spanish "pimienta," to mean "black pepper." English borrowed the word from Spanish in the late 1600s or early 1700s, likely from of the islands in the Caribbean, as the word meant both "red sweet pepper" (the vegetable), but also "tropical dried berry used as a spice" ("allspice," so called in English because of its seeming blend of spice flavors). German also borrowed the word, but from French, as "Piment," and it's the German word for "allspice."