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November 2014 Brief: Volume 21, Number 33

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The Consequence of Progressive Economic Policies

 

by John Hendrickson

 

 

David Burton, who serves as a Senior Fellow in Economic Policy at The Heritage Foundation, argued forcibly in a recent essay that “progressives are the primary impediment to progress.”[1] When examining progressive policies from both a historic and current perspective this is correct. During the 1930s, President Franklin D. Roosevelt’s New Deal failed to resolve the Great Depression, and during the 1960s President Lyndon B. Johnson’s Great Society failed to win the “war on poverty.” Today, President Barack Obama’s policies of tax and spend, regulate, and control have also failed. In fact the welfare state, just as in Europe, is at a collapsing point symbolized by the massive level of debt. This is why in the aftermath of the Great Recession so many Americans are still struggling and the middle class is suffering.

 

Senator Jeff Sessions (R-AL), who serves as the ranking minority member of the United States Senate Budget Committee, along with the Republican committee staff, recently issued a report entitled The Obama Economy: A Chart Book, which examines the impact of President Obama’s policies.[2] The Obama Economy argues that “the great economic tragedy of our time is the erosion of the American middle class:”[3]

 

Millions of Americans find themselves locked out of the American Dream. Their wages are either flat or falling, even as the price of energy and goods surges; the labor force is shrinking; and the government stimulus which was claimed to lift the economy has instead sunk the nation into a chasm of debt.[4]

 

The reason for this is the policies that have harmed economic recovery and prolonged unemployment. These policies consist of spending and taxing, massive increases in regulations, and the impact of the Patient Protection and Affordable Care Act:

 

The reduced capacity of an economy heavily burdened with new regulations and taxes to create jobs following the end of the 2007 recession explains much of the decline in the labor force participation. By August 2014, the participation rate had fallen to 62.8 percent of the civilian population, which is the lowest level since March 1978, 36 years ago. It stood at 65.7 percent when President Obama took office in January 2009. Nearly all of the improvement in the unemployment rate is attributable to people dropping out of the labor force altogether. Since 2009, an estimated 4.1 million workers have simply stopped working and looking for work. More worrying is the number that has disappeared since the recession started: 9.7 million people have dropped out over the past six years.[5]

 

Although unemployment is down at 5.9 percent, it is estimated that the rate is closer to 18 percent when those who are underemployed or have quit looking for work are taken into consideration.

 

Wages have also declined for many Americans, especially for those in the middle class. As The Obama Economy explains:

 

Inflation-adjusted median family income has fallen from $62,611 in December of 2007 to $57,847 as of June 2014, or by $4,764. That is a 7.6 percent decline in six-and-one-half years. Since January of 2009, this indictor has fallen by $3,194, or by 5 percent. Some of the decline in family income can be traced to the decay in good-paying jobs that have not come back. The recession wiped out 8.7 million jobs, many in the high-wage sectors of manufacturing and construction. As the U.S. Conference of Mayors recently reported, workers in these sectors earned an average income of $61,637. When jobs began coming back during the “recovery,” they were concentrated in lower-paying sectors, like retail, trade, accommodation, administration, and the like. These jobs paid an average of $47,171. In other words, high-paying jobs were replaced by lower-paying jobs. This 23 percent wage gap caused the income of many families to fall, thus lowering the median of all.[6]

 

The reason for unemployment and low wages is the impact of higher levels of regulation and the Affordable Care Act. It is estimated that for Americans “to comply with federal regulations it cost $1.863 trillion in 2013.”[7] Regulations have a direct impact on individuals and businesses:

 

Regulatory costs amount to an average of $14,974 per household – 23 percent of the average household income of $65,596 and 29 percent of the expenditure budget of $51,442. This exceeds every item in the household budget except housing – more than health care, food, transportation, entertainment, apparel, services, and savings.[8]

 

The fact remains that progressive policies are harming the economy and weakening the middle class. The national debt of $17.9 trillion, the cost of the Affordable Care Act, the cost of regulations, and the looming costs of unfunded entitlements are causing the economic decline of the United States. “Progressive policies increase costs, increase deficits, increase the national debt, and increase the future of unfunded obligations of government programs,” argued Burton.[9]

 

The solution to our American economic crisis is to abandon and repent of progressivism and return back to constitutional limited government, which has a proven track record of promoting, protecting, and advancing economic liberty and prosperity.

 

Endnotes:
[1] David Burton, “Progressives are the primary impediment to progress,” The Daily Signal, The Heritage Foundation, Washington, D.C., September 25, 2014, <http://dailysignal.com/2014/09/25/progressives-primary-impediment-progress/> accessed on October 6, 2014.
[2] United States Senate Committee on the Budget, Republicans, “The Obama Economy: A Chart Book,” Budget Background, October 2, 2014, <http://www.budget.senate.gov/republican/public/index.cfm/budget-background?ID=92ecaf4d-918d-4cc4-be32-d9dd6e053707> accessed on October 16, 2014.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Clyde Wayne Crews, Jr., “Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State,” Competitive Enterprise Institute, April 29, 2014, < http://cei.org/studies/ten-thousand-commandments-2014> accessed on October 16, 2014.
[8] Ibid.
[9] Burton.

 

John Hendrickson is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

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