The Feehery Theory

 A friend of mine who shall remain nameless wrote this as a special column for The Feehery Theory.  I thought it was quite good.

The common refrain among Democratic operatives is that “it takes time” for an economic recovery to take hold following such a dramatic, severe recession like the one we experienced in 2008 and 2009. The thinking goes that there was a shock to the system so great that it will take significantly longer than four years to fully heal and restore growth and job creation like we are accustomed to. After all, as Bill Clinton said in his convention speech last week, even he couldn’t have brought the economy back more quickly. Moreover, we should give the Obama economic policies more time to work.

This message architecture that Team Obama has built actually seems to be resonating to a certain degree and anecdotes among some swing voters indicate that the “it takes time” mantra has some currency. What is missed by this is arguably the key piece of the election contest: the recovery from June 2009 to September 2012 hasn’t demonstrated a positive trend line indicative of a slow, but steady economic comeback, rather, it has been a jagged line with growth in fits and starts, signaling a fundamental lack of confidence among consumers and investors about economic and regulatory policy moving forward. This may seem like a nuanced distinction but it is important to understanding why the recovery hasn’t been stronger and why the Obama campaign’s claims don’t hold water.

Consider the following points:

1. Since the recession officially ended in June 2009, the economy has maintained a “two steps forward, one step back” pattern. The governing board that deems when economic cycles begin and end points to this date as the end of the recession even though we all know that the hangover continued for some time. Even so, coming out of an economic downturn, there have historically been either V-shaped or U-shaped recoveries with varying degrees of economic and job growth; this recovery has resembled more of a mountain range or skyline with unemployment dipping one month, then rising the next and GDP growth strong one quarter but anemic the next. In fact, as has been widely publicized, for the years 2010, 2011, 2012, there was substantial optimism about a robust recovery in the beginning of each year only to stall in the second and third quarters. This, unfortunately, has become an unmistakable trend the last three years and a major cause is a lack of confidence among investors and consumers, largely due to tax and regulatory policy.


2. President Obama is not even running on an economic plan for the next four years. A byproduct of trying to define Governor Romney and directing most of the campaign’s resources to attacks on the Governor and Republicans is that it leaves little time to talk about your own agenda. Apart from a tax increase on those making $250k or more and very modest, son-of-stimulus legislation that lacks even Democratic support in Congress, the President’s economic plan is very hard to detect. Elections, as the saying goes, are about the future but little has been said about the economic plan for a potential second term. How or why should the President be given more time for his approach to work when the campaign barely talks about what it would do to jump start the economy?


3. The Democrats dominated Washington for two years and got virtually everything they wanted. One of the biggest canards is that Republicans in Congress are blocking the President’s agenda. For two years, 2009-2010, Democrats controlled the House, Senate and White House and enacted the three big-ticket items they were advocating—a massive stimulus, healthcare reform and financial reform. This is the core of the President’s agenda and the fact is that it has resulted in one of the weakest economic recoveries in modern history.


4. By the President’s own standard, this could be a “one-term proposition.”  President Obama famously told NBC News that if he doesn’t perform and his record isn’t good, that it could be a “one-term proposition.”  Both Obama campaign officials and surrogates (e.g. Martin O’Malley) have had trouble answering the famous Reagan query, “Are you better off now than you were four years ago?” That’s because everything from unemployment to median household income to the national debt is worse than it was four years ago. True, the severe recession had a chilling effect on a number of economic indicators but since the recession officially ended more than three years ago, any moderate recovery by historical standards would have reversed a lot of this damage by now. It’s not and it hasn’t.

It’s anyone’s guess who will win this election but everyone knows the economy and jobs is the central issue in the race. On this score, the Obama campaign can try to make a plea to give their plan more time to work and blame former President Bush and Republicans in Congress but the claims simply don’t add up.