PROMISES, PROMISES: Obama's mixed economic record

President Barack Obama

President Barack Obama

EDITOR'S NOTE - One in a series examining President Barack Obama's campaign promises and what he is doing, or not doing, to keep them

The issue

The U.S. economy is recovering from the Great Recession but at a modest, uneven pace. Many scars remain visible, particularly an unemployment rate of 7.6 percent. The U.S. has 2.8 million fewer jobs than in December 2007, when the recession began. And average hourly wages have trailed inflation in the past three years.

Meanwhile, the federal budget deficit has ballooned, topping $1 trillion each year in President Barack Obama's first term. It is forecast to fall to $845 billion this year. Obama faces the challenge of reducing that gap without cutting it so quickly that it slows growth.

The campaign promise

Obama promised a balanced approach to deficit reduction that wouldn't undermine the recovery or place most of the burden on the middle class.

He also sought to revitalize manufacturing, harkening back to an era when high-paying factory jobs were a gateway to the middle class. Obama promised to cut the corporate tax rate for U.S. manufacturers to 25 percent from 35 percent, while penalizing those who shift work overseas. He also proposed more job training and called for the creation of 15-20 manufacturing research hubs, all as part of his promise to create 1 million new manufacturing jobs by the end of 2016:

"We can help big factories and small businesses double their exports. And if we choose this path, we can create a million new manufacturing jobs in the next four years. You can make that happen. You can choose that future." — Democratic convention speech, Sept. 6, 2012.

The prospects

Obama has had mixed success in reducing the deficit without unduly impacting growth. He struck a deal with Congress to avoid the "fiscal cliff," a set of tax increases and spending cuts scheduled for Jan. 1. Relieved businesses responded by stepping up hiring and spending.

But he and Republican congressional leaders allowed Social Security taxes to rise 2 percentage points at the beginning of the year, cutting take-home pay for nearly all working Americans. Middle and lower-income Americans were hardest hit because the tax is levied only against the first $114,000 of income.

And Obama wasn't able to avoid $85 billion in automatic spending cuts that kicked in March 1. Economists warn the cuts could shave a half-percentage point from growth this year. Obama said in a presidential campaign debate that the cuts "will not happen." But they have. They could be reversed in a future agreement.

In his budget plan, Obama now proposes cutting future Social Security benefits by changing how they are calculated. Some liberal Democrats in Congress expressed opposition, charging that the move would harm lower-income recipients.

And Obama's proposal to cut taxes for manufacturers has been caught up in a stalemate with congressional Republicans over deficit reduction.

On a brighter note, a provision to create the manufacturing research hubs garnered bipartisan support and was attached to a Senate budget proposal.

Manufacturing is picking up a bit and creating more jobs, but adding 1 million more by 2016 is unlikely. That would require 250,000 new factory jobs per year, nearly double the current pace.

Several trends are working in favor of American manufacturing. Labor costs are rising in China. U.S. corporations are increasingly worried that overseas supply chains are vulnerable to natural disasters and other disruptions. And an oil and gas drilling boom has made energy much cheaper in the U.S., reducing manufacturing costs. Factories have added more than 500,000 jobs in the past three years.

But factories still only employ about 9 percent of the U.S. workforce. That's down from 14 percent in 1997.

And more manufacturing output doesn't create many more jobs, because automation has made many factories highly productive. The Congressional Research Service estimated in a July report that manufacturing output increased 19 percent in the three years after the recession ended. But employment rose only 4 percent.

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Comments » 10

August8 writes:

No scars, just covered in BS

panola60 writes:

Imagine if, during the campaign of 2008, someone had written the following: “If Barack Obama is elected president, then each year from now on the federal budget will be a trillion dollars in the red. He will pile up in two terms more debt than all previous presidents combined. Interest rates will stay at near zero; he will lower the Labor Force Participation Rate to 1979 (Jimmy Carter) levels. Record use of food stamps, unemployment, and disability insurance will be hallmarks of recovery. The government will take over health care, and the costs will skyrocket.

WMissow writes:

Please Mr. Stoertebeker your statement holds no relevance to Obama's failing record.

August8 writes:

in response to WMissow:

Please Mr. Stoertebeker your statement holds no relevance to Obama's failing record.

Your wasting your time responding to this "person"

August8 writes:

His work is a failure, not by any means mixed !!!!
In fact, his time in Washington will prove to be the worst in history.

26yearsonmarco writes:

"Several trends are working in favor of American manufacturing. Labor costs are rising in China. U.S. corporations are increasingly worried that overseas supply chains are vulnerable to natural disasters and other disruptions. And an oil and gas drilling boom has made energy much cheaper in the U.S., reducing manufacturing costs. Factories have added more than 500,000 jobs in the past three years."
"But factories still only employ about 9 percent of the U.S. workforce. That's down from 14 percent in 1997."

If anyone believes factory jobs are going to move back here from China, they need to read this:

http://www.bloomberg.com/news/2012-06...

WhiskeyTangoFoxtrot writes:

Obumer and his friends are coming for your retirement accounts next. If you believe This...http://www.bloomberg.com/news/2013-01... article is saying government is here to protect you or, here to help. I have a bridge to sell you. Cyprus was just the start.

For Klaus...http://www.youtube.com/watch?v=3RjUJy... This is a must watch for everyone. This is one of the few people in government with any balls. Pay attention to whats happening in the EuroCommunist nations. It is important!

August8 writes:

in response to GorchFock:

(This comment was removed by the site staff.)

Da !!!!

26yearsonmarco writes:

Here is just one more example of the "OBAMACACE AFFECT" on business and employees.

http://www.deadline.com/2013/04/cinem...

August8 writes:

in response to GorchFock:

(This comment was removed by the site staff.)

Da

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