“The Economic Road We’ve Traveled” During the Obama Presidency
publication date: Mar 30, 2012
I’ve discussed and analyzed the Republican Presidential nomination process and candidates at great length in recent months. I haven’t done the same on the Democratic side for the simple reason that no one is opposing President Obama for the Democratic nomination. (I never really liked the fact that the incumbent party didn’t have a competitive race to make the sitting President earn his nomination again.)
The Obama campaign has recently put our a 17 minute documentary style video entitled “The Road We’ve Traveled” which is narrated by actor Tom Hanks. As much of the video discusses the economic condition of the country when Mr. Obama took office and what has happened since and given the number of questions I’ve gotten about the topics covered in the video, this article will analyze the economic content of the documentary. I encourage you to watch the video below now.
After winning the election on November 4, 2008, then Senator Obama was sworn into office and became President on January 20, 2009. In the months leading up to the election, a severe recession was unfolding and global stock markets were falling sharply against the backdrop of a credit crisis.
The video however grossly exaggerates and misrepresents the state of the economy as the President prepares to take office:
Rahm Emanuel: You had people telling you that the auto industry was literally days from collapse. The financial sector’s kind of the heart that pumps blood into the economy was frozen up and in cardiac arrest.
David Axelrod: …Tim Geithner, the incoming Treasury Secretary said the financial system’s locked up and Mr. President, it could collapse.
Narrator (Tom Hanks): Not since the days of Franklin Roosevelt, had so much fallen on the shoulders of one President. And when he faced his country, who looked to him for answers, he would not dwell in blame or dreamy idealism.
The auto industry had particular companies which were in financial trouble and the financial sector did freeze up but that happened well BEFORE the actual election and well BEFORE Mr. Obama assumed office. The federal government loans (TARP) to the financial industry and to the auto industry were passed in September, 2008. The financial sector was well on its way to healing in late 2008.
I find it laughable that the video claims that Mr. Obama “would not dwell in blame” as the President repeatedly has blamed the Bush administration for various economic problems. In the video and in many speeches, the President has said that the economic decline was the worst since the Great Depression. As I have documented in other articles, many economic measures (e.g. unemployment, inflation, etc) were much worse in the late 1970s/early 1980s, for example.
Later in the video, there is more about the auto industry bailouts:
Elizabeth Warren: If the auto industry goes down, what happens to Americas manufacturing base? What happens to jobs in America? What happens to the whole Midwest?
President Bill Clinton: If you closed all these car dealerships, and you killed all these auto parts suppliers, people have no earthly idea what would’ve happened not only to the economy, but to our self image.
Emanuel: You know a lot of conventional wisdom wanted to do what Mitt Romney did, let it go. Can’t be saved. Why put good money after bad?
In addition to the fact that the auto industry help was initiated under the Bush administration, the notion here that the whole industry would have otherwise collapsed and vanished is utter hyperbole. The Obama folks continue to misrepresent Mitt Romney’s position on this issue. Romney favored a so-called pre-packaged bankruptcy which would have allowed the courts and private sector to do the renegotiations rather than getting the federal government involved.
I understand that politicians will be politicians and I have nothing against President Obama. The economy was in a severe recession when he won the election – the poor economy was a good part of the reason that he won the election and the Democrats also swept Congress.
However, the notion that Mr. Obama saved the economy (and auto industry) from collapse is utter nonsense. The “saving” was already done by the time the 2008 Presidential election was completed. By the time that Mr. Obama was sitting in the Oval Office in late January, 2009, the U.S. economy and stock market was bottoming. The near one trillion dollar stimulus package that Obama did advocate and got passed was promised to keep the unemployment rate below 8 percent. Instead, unemployed soared to more than 10 percent and has yet to decline below 8 percent.