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Obama’s Two-Year Economic Report Card

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Posted on Dec 31, 2010
White House / Pete Souza

Presidential huddle: Barack Obama holds a meeting on the economy with his advisers in the Roosevelt Room of the White House on Nov. 15.

By Nomi Prins

There are two potential ways to measure the economic performance of a political leader. One is by the profitability, stock prices and executive bonuses of a nation’s corporations. The other is by the financial condition of the majority of its population. Since he came to power, President Obama and his economic team have propped up the former and failed miserably to aid the latter.  (For the record, ever since the first paragraph of Obama’s pre-primary website economics plan put free markets before people, this is where we were going, but it still hurts to get there.)

The S&P 500 index is up 50% since Obama took office. But unemployment remains higher than it was when he entered the White House, home foreclosures continue to mount to the detriment of borrowers and entire neighborhoods, health insurance companies responded to his health care “reform” bill by raising premiums, and the financial system’s largest banks continue to prosper in the wake of a multi-trillion dollar bailout with no strings attached to share their subsidizations with the rest of American citizens. To top it all off, as he approaches the midpoint of his first, and likely last, term, Obama bowed to the pressure of the Republican Party and extended tax cuts for the richest Americans in order to be able to also extend them for everyone else more sorely in need. There’s only so long you can blame another administration for your actions.

Obama’s economic policies have either been continuations of his predecessor’s, as in the case of taxes and bank bailouts, or bills so watered down to appease corporations, notably banks and insurance companies, that they are ineffective. In the process, he continues to alienate his supporters—individual voters, not the companies that funded his candidacy—leaving their economy in shambles. Here’s the recap.

Taxes

Just in time for Christmas, we got Obama’s big tax-cut compromise. Obama’s reverse Robin Hood deal with the Republicans disproportionally takes from the poor to give to the rich. The plan adds another $1 trillion to the record United States deficit, $700 billion of which would be the cost of extending tax breaks to the wealthiest 2 percent of the country, the rest going toward jobless benefits—necessary to help those victims of the wider economic problems, but not complemented with a job-creation program.

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According to the Center on Budget and Policy Priorities, American millionaires would get 22 percent (or $200 billion over two years) of the benefits of the deal, while the bottom 20 percent of American workers would get less than one-half of one percent. According to David Cay Johnston, the 45 million households that make less than $20,000 a year will be slapped with a tax increase of $150 to $200.

Even though the majority of his own Democratic Party supported extending cuts only to Americans making less than $250,000 a year (on TV anyway, apparently not at their seats once the compromise was inked, notables with balls like Sen. Bernie Sanders aside), Republican “all-or-nothing” pressure was met by Obama’s capitulation. He could have bargained harder—say by suggesting that tax cuts not be extended for people making more than a million dollars, rather than punting the tax cut issue into the 2012 presidential election period.

What Obama effectively did was adopt George W. Bush’s tax policy in total rather than come up with a better deal, even though the Bush tax cuts increased the net worth of the wealthiest Americans while the wages of the rest of Americans (the ones that had jobs) stagnated or decreased per hour worked. The Republicans obviously considered the deal a victory, to hell with any Republican voters in the bottom 98 percent of the country. Wall Street thought it was better than expected. Jamie Dimon was all but salivating. Even though the majority of Americans wanted to end tax breaks for the wealthiest, plus extend unemployment benefits, Obama couldn’t pull it off.

Housing

Obama’s $75 billion Home Affordable Modification Program (HAMP) was an unmitigated disaster for the borrowers who tried to take part, despite his promises that it would help 3 to 4 million struggling borrowers keep their homes.

On Dec. 15, I spoke at a mortgage fraud seminar in Ontario, Calif., and, let me tell you, there’s more fraud going on in modification-land than there was in loan-origination-land. The next day, over in Washington, Tim Geithner spoke glowingly of everything the administration has done to help the financial system, gloating laboriously over the bells and whistles of the various asset purchase and loan extension bank bailout programs and how much money we taxpayers made as a result. As for borrowers—you know, the little people—he stressed the number of modification applications in the pipeline instead of actual permanent modifications. This was primarily because it was a voluntary program on the part of the banks, which had no incentive, economic or legal, to work with borrowers. In the meantime, 8 million to 13 million foreclosures are expected to have taken place from the time the banks got their bailouts until 2012. If you figure on average there are three people living in each home, we’re talking 24 million to 39 million displaced people.

I really wish Geithner could have been standing in front of the borrowers at the seminar I attended, if only to get a clue.

Half of the 1.4 million borrowers that entered the HAMP program were kicked out. Only 2 percent of the loan modifications so far have involved lasting principal reductions. Most of the rest were given temporary reprieve, only to see their payments rise at the end of their trial periods or their banks rush to foreclose on them anyway.

To fix this problem, Obama has just created a $14 billion principal reduction program – something that should have been done on a far grander scale about two years ago. It remains to be seen whether this will be any more effective than the larger initial program, since participation is equally voluntary on the part of lenders, notably the biggest five banks that control two-thirds of the nation’s mortgages. I’m not holding my breath.


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Dale Copps's avatar

By Dale Copps, January 4, 2011 at 6:44 am Link to this comment

Let’s have less idolizing of Bernie Sanders (one of my senators). He had an opportunity to scuttle the faux health care bill and passed, and his “filibuster” was little more than a publicity stunt, although it seems to have snowed just about everybody.

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By berniem, January 3, 2011 at 4:13 pm Link to this comment

To my mind all one needs to know about Obama’s handling of our economic woes is that he is doing NOTHING to stop Intel and Hewlett-Packard from investing millions to build schools and provide training as well as constructing factories in VIET NAM which will result in massive lay-offs here! All of you Vets from the Nam war, aren’t you proud that your service and sacrifice along with the death of 50K+ of your brothers contributed to the greater glory of the Amerikan corporatocracy and neo-liberal capitalism? Remember this next time you get screwed by the VA! We need a return to the spirit of ‘68. FREE BRADLEY MANNING AND JULIAN ASSANGE!!!!

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Paolo's avatar

By Paolo, January 3, 2011 at 2:38 pm Link to this comment

Thought I’d drop in after a bit of a break with my libertarian perspective on this whole mess.

Both major parties, along with their corporate sponsors and the Federal Reserve, have mucked things up so badly, there is no way out of economic catastrophe, this time.

The official public debt is now closing in on 15 trillion, but that doesn’t include obligations like Social Security, Medicare, and the bailouts of Fannie and Freddie. Toss those in, and we’re under water to the tune of 60 trillion.

That amount of debt can only be repaid in one of two ways: repudiation of the debt (that is, declaring bankruptcy openly) or inflation (that is, declaring bankruptcy on the sly).

Take just the lower number: 15 trillion. The interest alone on the debt in FY 2010 was over 400 billion. That is, if we suddenly balanced the books, and began trying to pay down the debt with a payment of one billion PER DAY, we’d still be deeper in the hole at the end of the year.

Some perspective on a trillion dollars: if you were born in the year 1, and spent a million dollars PER DAY, you still would not have spent a trillion dollars, in the year 2011. If you spent a dollar per second, starting now, you would not have spent a trillion dollars after thirty-thousand years.

In summary: we are screwed. Sayonara, USA. Stock up on freeze-dried food, folks. It’s gonna get ugly.

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By ElkoJohn, January 3, 2011 at 12:58 pm Link to this comment

Our government operates under the principle that what’s
good for Wall St and the multinational corporations is good for America.
The Republicans are heartless about it, and the Democrats
try to throw some bones to the people to stay in the running
against the Republicans—but let’s face it, the average person
lives pay check to pay check, and the ruling class doesn’t give a damn.
The ticking time bomb is the national debt.
I think this will bring the empire down.
‘‘Enlightened self-interest’’ just doesn’t exist in our ‘‘greed is good’’ system.
The clock is ticking.

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By dcrimso, January 3, 2011 at 12:49 pm Link to this comment

Wake me up when the first Corporate CEO is hung from the lamp post.  Until then it’s all talk.

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Alonso's avatar

By Alonso, January 3, 2011 at 1:37 am Link to this comment

This didn’t start with Obama or the Republican or Democratic parties. It started with people thinking that you can get something for nothing. That the government can create jobs, wealth, or anything else except war. That the government will take care of everything. The one thing that the USA always gets is the government it deserves. Until people wake up to that reality things will continue on the current path.

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By alturn, January 3, 2011 at 1:27 am Link to this comment

We have had the same problem on the local level as is now being recognized on the national level.  You kick the bums out because they are not taking care of the people’s needs and they get replaced with other cogs with the same consciousness. 

People power must emerge.

“Despite the turmoil, what is happening around the world is for the good of mankind. Politicians will look for guidance, and the will of the people will become the constitution of nations and countries.”

“The US and the USSR are no longer superpowers. Humanity is the superpower. The will of the nation and country will be based on the will of the people. The people will make sure politicians do not make mischief.”

“The younger generation, and ordinary people everywhere, expect politicians to set an example, to serve the people with honesty, sincerity and detachment. In Maitreya’s view, no leader is attending to his duties in the right fashion at the present time. Instead of fulfilling the will of the Lord, they are merely fulfilling their own desires. This way lies nothing but confrontation, confusion and chaos. Maitreya said: “It is the destiny of nations and countries that you are playing with. What are you doing for the younger generation? Nothing. You want them to walk in your footsteps, but there is a gap growing between the older and younger generations. Society will not be what the older generation is hoping for. It will be completely different.””
- World Teacher Maitreya through an associate as provided to the media by Share International

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By the worm, January 2, 2011 at 9:58 pm Link to this comment

Obama’s Top Nine

1. Shifting private debt to the public sector (thereby freeing corporations, esp
the financial industry, but also financial arms of GM, GE, etc, and saddling the
middle class with the obligation to ‘pay it off’).

2. Watching private sector profits reach un-precedented levels (while
investment goes abroad, hiring moves abroad, and manufacturing continues to
disappear and un-employment continues).

3. Raising the defense budget 6% (so, when “cuts” come, the defense industries
will be safely sandbagged).

4. Allowing the financial industry to ‘borrow’ from the ‘public sector’ (i.e. me
and you) at 1% and buy bonds that pay 3% interest (Banks take your $1 and
make $2 off each one they ‘borrowed’ from you. But, here’s the real deal: You
gave them the $1 they ‘borrowed’, and you pay them the $2 interest they
‘earned’ on the bonds. All the money they ‘invest’ came from you – a ‘loan’ –
and all the money they make comes from you – you have to cover the interest
on the bonds).

5. Allowing the financial industry to ‘borrow’ from the ‘public sector’ (i.e. me
and you again) at 1%, to loan to me and you at 4%, 12%, 18% or more
mortgages, credit cards and other lines of credit (pocketing 3%, 1% and 17% on
your and my money – first given to them by us, then ‘paid back with interest’ by
us).

6. Giving private sector insurers a windfall: mandated customers, with a
taxpayer-paid overhead rate of 20% for ‘mandated customers’ (20% of our
premium spent on administration, CEO salaries, bonuses, sitting on Boards to
set rates and decide who’s covered, lobbying for the insurers’ benefit,
advertising and propagandizing to redefine more and more as ‘health care
service’ while delivering fewer and fewer services—- essentially, giving our tax
money to insurers to do with it what they will). *The American people wanted a
government administered plan like Medicare - for everyone. (72% - CBS/New
York Times poll June 2009)

7.  Expanding the war in Afghanistan. (64% of the American people opposed
expanding the war in Afghanistan and wanted to disentangle from Bush-era
‘War on Terror’ and ‘preventive war’ policies. Still, over 60% of Americans
oppose the war.?

8.  Keeping the six too-big-to-fail banks – now bigger than ever; kept deposits
at risk by maintaining huge grey areas between commercial and investment
banking; didn’t ‘punish’ the financial industry - now even more profitable, with
bonuses among the biggest ever.

9. Supporting ‘The Compromise’ – giving billionaires $10 for each $1 to an un-
or under-employed person or family.

Obama’s first two years ! And the third is coming up !

For those of you keeping score, that’s about $14-16 Trillion shifted from
private sector corporate debt to you and me, the tax payers.

Balance Score Card ? Nope.

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By glider, January 2, 2011 at 7:26 pm Link to this comment

Johann,

“http://whatthefuckhasobamadonesofar.com/”

Yeah it is amazing what one can claim rhetorically when one is allowed to ignore actual results, outcomes, and better alternatives.

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By Amex, January 2, 2011 at 1:41 pm Link to this comment
(Unregistered commenter)

patriot 10101 - This is all true, but tell me how you can convince a nation of ignorant, fat, and lazy people that we are herded like cattle.

I have chosen the path of “just fuck the government” and live on the land where I was born, but refuse to call myself an American - I feel like a Native Indian!

I cannot endorse Americanism any longer as they are too stupid to to be championed.  I no longer believe in this system and I know that we are being fucked over by this plutocracy!

O’bummer is the last dupe job that I receive here as I as I am not going to vote anymore.  Yes - tell me that change only comes from the ability to vote, and I will tell you - Bullshit!!  There is nothing short of creating another French revolution to solve this current fuck job.  At least the French were able to revolt - The American is too fat and stupid to do anything!!!!

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democratz.org's avatar

By democratz.org, January 1, 2011 at 4:27 pm Link to this comment

Please.


I hope you will sign this petition and get your friends to sign it.

Fight back against conservatives in congress. Boycott some companies that donate to conservatives in congress.

Sign this petition at http://www.democratz.org demanding congress and the President enact a progressive agenda. Pass this link around to every one of your friends. Post it on bulletin boards, blogs and facebook groups around this country and send it on twitter. The Peaceful revolution has begun.

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JohannG's avatar

By JohannG, January 1, 2011 at 4:27 pm Link to this comment

As this analysis points out, the current White House
occupant has mostly continued his predecessor’s
policies. With predictable results. To be fair, on
the fringes there have been some changes…visit
http://whatthefuckhasobamadonesofar.com/ for details.
My take, for what it’s worth, is that Obama is a
morally vacant, non-transformational follower, NOT a
leader. I wish we’d had a great colored president,
instead we got another vapid Condi Rice, but even
more disastrously so.
Only thing that keeps me up at night is what is going
to replace this current nightmare in 2012…

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By samosamo, January 1, 2011 at 3:29 pm Link to this comment

****************


If it were only true that it would shove o out in
2012, but hoping that a repub would not get
elected, just what does anyone think would
replace o. 2012 promises to be an ‘ugly as it
gets’ election year where even voter fraud will be
‘unashamedly’ blatantly on display, just as the
theft in wall street is and the control the military
has of this country.

And in the end, the winner will not look, feel or
act any different than o and his predecessors.

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By bpawk, January 1, 2011 at 3:15 pm Link to this comment

By decimating the left and pushing Ralph Nader et al out of the way for your great Obama, you have nowhere else to go now and Obama knows it. Your political choice from now on: right or extreme right.

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By Inherit The Wind, January 1, 2011 at 11:59 am Link to this comment

Hey, it ain’t all Obama! 81 Senators voted for the bill, and only, I think, 14 Dems and 5 GOPers voted “No”. That means 45 Dims and 36 Rethugs went for it.
That’s Bi-Partisan support for tax cuts for the richest!

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G.Anderson's avatar

By G.Anderson, January 1, 2011 at 10:28 am Link to this comment

Yes, this is the truth. the one that is being lived by the people everyday. Obama’s
administration is like a bad dream. It’s very much like a marriage, in which one day you
wake up to find out that your spouse is cheating on you, and only married you so they
could cash in.

The divorce is painful but it’s much less painful than looking at the cheater next to you
everyday.

There are irreconcilable differences between the American people and the Obama
administration.  If the Democratic party doesn’t dump him in the primaries, the Dims will
be finished.

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By TAO Walker, January 1, 2011 at 2:40 am Link to this comment

Looks like “patriot10101” is the only one here (including Ms. Prins) with a clue about what the set-up really is.  The machinery of “governance” is doing exactly what it’s been designed and built to do….facilitating the exploitation and CONtrol of those “huddled masses” who have not even the fig-leaf anymore of any pretense to any “rights” (Human, civil, or otherwise), as mere livestock in the feedlot operation called the “global”-eCONomy.  “Conden” is apparently still lost in the allamericanfeverdream. 

“neen008”, on the other hand, is getting with “the program”....knock-offs are where it’s @

HokaHey!.

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By REDHORSE, December 31, 2010 at 11:49 pm Link to this comment

THANK YOU TRUTHDIG FOR ANOTHER NOMI PRINS ARTICLE!! And, TY Nomi Prins.

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By skimohawk, December 31, 2010 at 10:13 pm Link to this comment
(Unregistered commenter)

Ms. Prins:
Thank you for honestly detailing Obama’s dismal record.
I sincerely hope you and other writers will continue bringing to light the sham that is now our government.
Barack Obama is in bed with the big banks, and it’s obvious we can expect no change for the better during the next two years.
What’s frightening is that those who voted for Obama in 2008 are just beginning to wake up and smell the coffee, and will be two years from now more receptive to the deception and duplicity of the Republicans: 2012 will see us only be going from bad to worse.

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By Conden, December 31, 2010 at 9:07 pm Link to this comment

Great article Nomi.  The obama administration and the democrats are totally right wing.  There is no excuse for their willfully chipping further away at the majority of people in this country when what they obligated to do is push egalitarian policies—to end homelessness, provide living wage, green jobs to everyone, and lessen corporate power instead of cementing it into place with the same shovel they use to crush young people into a life of peonage.

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