2nd Term Score Card
Friday, November 9th, 2012
It is no secret that we have been predicting a Romney victory for several months. While the polls leading up to Election night showed a dead heat, very few predicted that democrats would come out the way that they did (preliminary numbers showed +6 Democrats at the exit polls). We knew last night that this article was going to be about Mitt Romney’s first term or President Obama’s second term, but the numbers do not change. We are well aware that a politician cannot create jobs themselves, but they can influence the environment needed to encourage job growth. Regardless of which candidate we were to write about, these are the numbers that need to be achieved for a successful term in office.
- · GDP must reach 5% year/year at least once in President Obama’s second term. While 5% sounds quite high compared to the dismal sub 2% growth that we have seen, it is achievable. During the Reagan administration, the federal government had to intentionally devalue the USD in order to keep exports competitive on a global scale, because GDP was growing at over 9.5% year/year.
- · Bring unemployment down to 5% or lower. With unemployment still an issue facing many Americans, we need to get our nation back to work. By doing so we will also be able to make necessary cuts to social welfare programs which have become beyond burdensome on our federal government.
- · Bring U-6 unemployment back to below 10%. Readers have heard us refer to U-6 in the past; it is a published government figure that we feel closer resembles national unemployment. It includes the same numbers factored into U-3 (the official rate) and also factors in people looking for fulltime work but have to settle for a part time job, as well as people who are not working but have indicated they wanted a job in the previous 12 months. These workers are referred to as “marginally attached workers” or “discouraged workers.” President Clinton was able to bring U-6 down to roughly 7% from 12% from 1994-1999. If President Obama were to accomplish this goal at the same rate, U-6 would be somewhere between 8 and 8.5%.
- · No more budget deficits. Our deficits have exceeded $1 trillion every year for the last four years. This is an unacceptable and unprecedented rate of spending that must be stopped. If deficit spending in the next 4 years surpasses $500 billion, it will be considered a failed term.
- · No more federal debt added. We have written before that the federal debt is not a problem yet, but it is certainly on its way to being a major problem. The government needs to either increase revenues in order to fund their spending (or start paying down some of the debt), or cap spending to a reasonable level. The only viable option for the federal government to raise revenues would be through expanded payrolls. RAISING TAXES WILL NOT WORK. The proposed tax increases would not even begin to fund federal deficit spending, let alone cover it.
- · Do not blame the previous administration. “Blame Bush” may have been bought by the public for the first four years; the next four President Obama can only blame himself. Had Romney been elected, blaming President Obama would not have been acceptable, and President Obama continuing to pass the buck will not be tolerated either.
Remember that this scorecard would have been written for either President Obama or Governor Romney. The numbers and stats listed above are not partisan issues, but rather economic issues that need to be resolved for the US to get back on track. We just hope that President Obama can make his second term a success and that the US economy can thrive once again.
Ben Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and licensed with FINRA (www.Finra.org) through Treece Financial Services Corp. The above information is the opinion of Ben Treece and should not be construed as investment advice or used without outside verification.