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Obama’s Two-Year Economic Report Card
Posted on Dec 31, 2010
By Nomi Prins
Unreformed Banking System
Throughout his presidential campaign and his first 18 months in office leading up to the passing of the Dodd-Frank so-called financial reform bill this summer, President Obama asserted that the crippled economy was predominantly the result of failures in the banking system.
He admonished bankers for their greed and vowed that those days were over. Never again. Blah, blah, blah. But, the financial reform bill that he championed stopped none of the risky practices of the most powerful banks. (If you want to buy a package of distressed mortgages, call any of them today.) Nor did it break them up into smaller, more easily regulatable entities. Indeed, the largest banks in the United States are now bigger and stronger than they were before the bailout, even as smaller banks continue to close, creating a far less stable banking environment than before the crisis.
Geithner, as Obama’s treasury secretary, remains an apologist for the bailout, and it was Obama who moved to reconfirm Ben Bernanke as head of the Federal Reserve instead of making good on his major promise of “change” in the financial system. That’s why Wall Street bonuses this year are expected to be 5 to 10 percent higher than last year, even though bank profits are lower and lending remains muted. Because things have changed so much.
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On the job front, the picture remains bleak, as everyone is keenly aware. Nearly 11.5 million people have lost their jobs since Obama took office, despite claims that the $787 billion stimulus package saved 3 million to 4 million jobs. The unemployment rate of 9.8 percent is 32 percent higher than the 7.4 percent rate it was before Obama was inaugurated, and it has steadfastly stood at that level throughout his term.
Even worse, the number of workers who have been unemployed for over six months remains the seventh-highest on record at 6.1 million. There are still 4.4 unemployed workers for every available job (compared to 2.8 workers per job during the early 2000s recession). Thus, one in six U.S. workers is either unemployed or underemployed, which amounts to nearly 26.8 million workers.
Meanwhile, corporate profits have jumped back to near-historical highs, and banks are hoarding an extra $1 trillion in reserve at the Fed instead of using it to restructure mortgages or lend to small businesses that could create jobs with the money. Obama’s administration has been unable to find a way to force more job creation by tying corporate and bank well-being to that of the greater economy, either because it can’t or doesn’t want to.
There were 59 million Americans without any health insurance in 2010, up from 46.3 million, or about 15.4% of the population in 2009, which was a slight increase from 2008. That 27% increase in 2010 is the highest per year under any presidency.
Sure, Obama promised that his new health-care-so-called-reform bill would help when it takes effect in 2014 and expand coverage to more than 32 million uninsured Americans. Meanwhile, health insurance companies hiked premiums by 14% this year and dropped the amount of coverage they provide for those increases. Why? Because they can. At that rate, even people that do have insurance coverage will see their costs nearly double by the time the reform bill takes effect, because “reform” never capped the premiums insurance companies can charge, which is not a tiny omission. This while attempting to mandate that everyone purchase health insurance, a double gift for insurance companies, now being battled out in the courts for the constitutionality of the mandate, not the extortionist cost of health care and insurance.
Meanwhile, the top 10 health insurance company CEOs bagged $228 million in 2009, up nearly 162% from the year before Obama took office, and they anticipate even more for 2010—and yet there are no major audits of their business practices on the horizon.
Despite his rhetoric to the contrary, Obama’s policies are far more pro-corporate than pro-populace, not a huge surprise, but still the reason that the Main Street economy isn’t improving. According to a Bloomberg survey from early December, more than 50 percent of Americans say they are now worse off economically than they were when Obama took office, a third think they are doing better, and two-thirds believe the country is headed in the wrong direction.
Those poll numbers, considering the weakness in the economy, aren’t necessarily horrible. President Ronald Reagan’s numbers were even worse after his first two years, and he still won his second term decisively. Plus, Obama inherited an abysmal economy, as he continues to remind us.
But just because you get on the train after it’s already rushing out of the station doesn’t mean you can’t find a way to stop it before it decimates a town or something bigger. The guys in the film “Unstoppable” ignored the dumb ranting of their suited bosses and saved the day. It can be done. (Go see the film; it’ll make you smile.)
A higher stock market is of little comfort to the millions of Americans who don’t have jobs, are facing foreclosure, fraudulent or otherwise, or have no health coverage. Equally, it’s of little comfort that, rather than finding the money to help this swath of citizens, the Obama administration added $700 billion to the deficit by giving the wealthiest Americans more tax breaks. Hell, if you’re gonna go for broke on the deficit, why not fight to spread that same $700 billion over the rest of the citizenry instead?
Obama’s economic priorities are primarily benefitting a small and influential part of the population, but they have not provided the rest of the country with anything to be optimistic about this holiday season. In that regard, he’s more Scrooge than George Bailey.
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