Federal Follies

In the financial field, we track indexes, economic indicators and legislative policy to provide us with a better forecast for the markets. While we remain apolitical when making investment decisions, we certainly have our own individual and independent political beliefs. This week we wanted to discuss 6 and a half years of the Obama Administration’s policies.

Beginning in 2008, then Senator Obama marketed himself as the antithesis to George W. Bush. President Bush’s policies regarding military action in the Middle East as well as his fiscal policies angered both the left side of the aisle and the right. Senator Obama campaigned that it was time for America to change and promised us a path to prosperity. To date, the administration has been plagued by scandals that bring Nixon-era comparisons to mind. Once elected, President Obama made the economy a number one priority, yet we have failed to see any significant improvement in GDP growth or U-6 unemployment, and federal spending has skyrocketed. It is easy to lose sight of all of the irresponsible actions over an administration, but let’s recap all of the follies and briefly describe the implications of each event. Note that these are not in any particular order of importance.

  1. Unemployment: We look at U-6 unemployment data rather than U-3 or U-4, and while we have seen a drop in the last 12 months, U-6 was over 15% for 37 consecutive months during the span of 2009-2011. Last year’s average unemployment rate according to U-6 was 13.8%, which is much better than the 16.7% in 2010, but significantly worse than the 8.2% average of 2006.
  2. Economic Growth: Under this administration, Real GDP Growth has not exceeded 4%, which by comparison was above 4% from 1996 until the early 2000’s resulting from Clinton’s economic policies, and Real GDP Growth jumped to over 8% during the Reagan administration. President Obama failed to supply any real economic impact with “Shovel Ready Jobs” and the economy continues to struggle.
  3. Lack of Wall Street Reform: President Obama promised to be tougher on Wall Street, yet we continue to see margin debt on the rise, a lack of oversight in derivatives markets, and criminals such as Jon Corzine of MF Global walk free. Note that while equities are at historic highs, it is our belief that these levels are not indicative of the economy but rather of the low interest rate policies of the Federal Reserve.
  4. The Affordable Care Act: Rammed through Congress on a partisan basis, this was a piece of legislation that the country was not ready for, nor were those in charge of implementing the infrastructure. The healthcare system in the US can certainly be improved, however numerous polls showed that the voters did not want this legislation passed, which led to significant Republican wins in the 2010 midterm elections.
  5. Amnesty: Having witnessed the immigration process in action, it is without question that we could correct the inefficient process for immigrants who want to come to the US to make a better life for themselves and their families. However, blanket amnesty is a slap in the face to those immigrants who went through the formal process, and this administration continues to support amnesty even though a significant portion of the population disagrees.
  6. Fast and Furious: Many have already forgotten about the botched weapons operation that left a US border patrol agent dead and automatic firearms in the hands of dangerous drug cartels. This was a case of a well-intentioned goal that was horribly miscalculated and executed.
  7. The IRS Scandal: The most Nixonian of President Obama’s scandals, details have unfolded showing that the IRS was aware of the targeting of conservative groups. Nixon also abused the IRS which was included in Article II of his impeachment.
  8. The NSA: As privacy becomes a deeper concern for more and more Americans, the revelation of just how deep the NSA’s reach was became a major concern for citizens.
  9. Drone Strikes on Syria: While the president promised a transparent administration, he apparently did not feel transparency was necessary when he issued a drone strike in Syria without congressional approval.
  10. Benghazi: It came to light that this administration put forth a coordinated effort to mislead the public on what caused the attack on the US Embassy in Benghazi resulting in Ambassador Stevens’ death. Many have argued that this as well could be an impeachable offense

With all of these distractions it is no wonder that the economy has failed to rebound. Please note that this list is not intended for taking partisan shots at the President, but rather to point out the mistakes of this administration. There are certainly similar lists that we could make regarding Republican administrations, but we must live in the present, and the shelf life of “blame Bush” has long since expired. President Obama promised a different type of presidency than that of Bush, and so far we have received more of the same. Our fear is that if this administration does not get their act together and focus on the economy, we may be in for a Jimmy Carter type of ending.

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.
« Back to the blog.