03.11.2013 09:43 PM

In Tuesday’s Sun: dispatch from sunny Florida

FORT MYERS, Fla. — Is this place coming back?

As recently as two years ago, it assuredly wasn’t. The thousands of winter-weary Canadians who trekked here every March saw plenty of evidence to suggest the once-great United States had ceased to be great. It was in deep economic trouble.

Florida’s prospects were grinding and grim. The U.S. in general was hammered by the great global recession with astonishing ferocity.

For the first time in years, however, good news seems to be finally outweighing the bad. Last week, the U.S. Department of Labour confirmed the national jobless rate had dropped to its lowest level in four years. In February, the American economy added nearly 240,000 jobs, sending unemployment to its lowest level since December 2008, when the U.S. started to go to hell in a handbasket.

To some, the job numbers were a big surprise. Wall St., which gets things wrong more often than not, had expected about half as many jobs. The good news sent the Dow Jones Industrial average to another record high.

What is most remarkable about this turnaround isn’t economics — it’s politics. Throughout American history, no president has achieved re-election with an economy as bad as the U.S. economy has been. In fact, presidents don’t really win re-election when GDP has gone below 3%.

Barack Obama’s achievement — winning in November, and winning big, too — is therefore pretty amazing. How did he do it?

From the beginnings of his presidency, Obama knew the principal cause of U.S. economic misery: The reckless deregulation mania of George W. Bush’s regime.

Long before he became president, Obama signalled he was no leftist reformer. On the economy, “we should be guided by what works,” he said.

So, while he favoured the New Deal of Franklin D. Roosevelt — and while he dismissed privatization fetish of the Republicans as “social Darwinism” — Obama was a Democrat in the Clintonian model. He gave shareholders a vote on executive compensation — a “say on pay.”

He created the “Buffett rule” — and gave families earning under $250,000 a tax cut, promising the middle class three times the benefit they would have received from the GOP’s John McCain.

He offered business a tax break for hiring more employees. He eliminated big tax cuts for big corporations, and levelled charitable tax credits.

But his signature achievement was the stimulus program he brought in within weeks of taking office. Coupled with multi-billion-dollar loans to the auto industry, Obama put the U.S. back on the road to the recovery it now (seemingly) enjoys.

On each of those initiatives — every one — conservatives opposed Obama. They derided him as a “socialist” and suggested he was a secret Muslim, and Africa-born, to boot. They are the very same ones now indifferent to what sequestration will do to everyday Americans and the recovery.

Obama’s economic policies were the right mix of private and public. Since 2008, the thread that runs through them is an acknowledgment that government can indeed be a force for good. But that government is not responsible for the irresponsible.

Up in Canada, it is Stephen Harper’s willingness to walk in lockstep with Obama — and the resistance of Jean Chretien and Paul Martin to demands for deregulation by bank lobbyists — that has kept Canada in a comparatively better position than the U.S. And, simultaneously, Harper has kept himself politically viable by acting like Obama — not Bush.

Until recently, Florida has been a nice place to visit. Thanks to Barack Obama, it’s becoming again a nice place to live in, too.

16 Comments


  1. Notice: Undefined offset: 180 in /nfs/c05/h06/mnt/72829/domains/warrenkinsella.com/html/wp-content/themes/warroom/functions.php on line 314
    !o! says:

    ” In fact, presidents don’t really win re-election when GDP has gone below 3%”

    You mean ‘GDP growth’ I think.


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    Holly Taylor says:

    a) The more the merrier in terms of FDR-style policies to get people working! Where are the fast trains Obama promised to build?

    b) President Clinton’s tenure was characterized by financial deregulation which set the stage for the excesses of recent years. Among his biggest strokes of free-wheeling capitalism was the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, a cornerstone of Depression-era regulation.

    He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. In terms of the status quo, Clinton reappointed Allen Greenspan who continued the “magic” of the Reagan-Bush years, no doubt under the eternal guidance of the Ayn Rand Collective.

    c) Harper has not been prudent economically; through his tinkering he squandered the surplus which subsequently led us into the red; from the Oda’s to Barazeaus to spending and spending the people’s money on partisan initiatives to stay in power (e.g. studying the “ethnic vote”) to trying to slip in temporary foreign workers to undercut labour standards, Harper is laissez-faire all the way. The Liberals, while better, achieved their economic goals through the most stringent austerity program since the War – they out-Reformed the Reform Party.

    One should not fool themselves. From pool cleaners to professionals, the greatest liquidation of human capital in history is underway. Only a radical program dedicated to the survival of the Canadian Nation, indeed, Western Civilization itself can save us now lest we return to a neo-feudal economic dark ages.


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    MississaugaPeter says:

    During Reading Week, I took my 3 teenagers + 22 year old down to Florida (South Beach). America looked good.

    But when I got back, I saw this video. Even though I am a self-made 1%er, this is wrong …

    http://www.youtube.com/watch?v=QPKKQnijnsM

    Just like I don’t believe that China is not in trouble (a dozen business trips there in 2012), America is living on borrowed time. I agree with you that Clinton was a great president, but I believe your assessment of Obama is wrong (he is just the better of two bad alternatives, nothing more).


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    James Smith says:

    Perhaps you’re right. Prob is FLUSA has one of the Tea Party’s poster boys.

    http://is.gd/JqJSrk


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    Marc L says:

    Reducing the causes of the crisis to “deregulation” is very simplistic (and I’m not arguing that poorly designed regulatory policies have nothing to do with it, on the contrary). The issue is much more complex, and “progressives” have to take their share of blame as well. After all, was it not “progressives” who favoured policies targetted at ensuring than anybody can purchase a home? Is it not “progressives” who favoured the lowest possible interest rates, therefore encouraging the Fed in keeping its policy rates too low for too long and encouraging easy access to credit, including mortgages. Would “progressives” have encouraged regulation aimed at restricting access to credit for lower-income, less creditworthy individuals. I doubt it. Finally, your comparison with Canada is simplistic as well. The decision to disallow bank mergers was ultimately a good one, given that we continue the misguided practice of protecting Canadian banks against foreign competition. But at the same time, you cannot boil down the soundness of Canada’s banking sector to that one factor. Canadian banks have a risk management ulture and practices are different from the U.S. Unfortunately, you can’t reduce everything to competing political views without making it all painfully simplistic.


    • Notice: Undefined offset: 180 in /nfs/c05/h06/mnt/72829/domains/warrenkinsella.com/html/wp-content/themes/warroom/functions.php on line 314
      James Smith says:

      Guess it’s just a coincidence that scrapping regulations that saved capitalism from itself happened at the same time the economy went into a tailspin. To call Clinton et al Progressives is only in contrast to the extreme right and radical right that make up the Democrats & Republicans.


      • Notice: Undefined offset: 180 in /nfs/c05/h06/mnt/72829/domains/warrenkinsella.com/html/wp-content/themes/warroom/functions.php on line 314
        Marc L says:

        The Democrats are the “radical right”? Whaaaaa???? What does Clinton have to do with this? How can Clinton (or Clintons) be “in contrast” to the Democrats? Are you on something?


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          James Smith says:

          Naw, the Dems are the extreme right & the Tea Party / Republicans are the radical right. The political landscape today in America has tilted so far Loony Right Ike would be labelled a socialist.


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            Marc L says:

            The term “extreme right” usually refers to fascists.


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      Torgo says:

      While I would not doubt that many who could be labelled ‘progressives’ or on the left cheered deregulation and lower interest rates, I think that the issues you raise here can be blamed on both sides of the political spectrum, with a heavier emphasis on the political right.

      Was it not George W. Bush who encouraged an ‘ownership society’? Was it not Alan Greenspan, a disciple of Ayn Rand (hardly a ‘progressive’), who kept interest rates low to fuel the housing boom?

      Also, lack of regulation aimed at “lower-income, less creditworthy individuals” was not a prime cause of the subprime mortgage crisis; blaming legislation like the Community Reinvestment Act is a frequent right-wing myth. Many of the people who took on subprime mortgages actually qualified for prime mortgages, but were given (sometimes illegally) subprime mortgages by the mortgage and financial industries because this pushed up profit margins and returns. This was a lack of regulation on financial institutions and reporting agencies, not on lower-income homebuyers and homeowners (who often turn out not to have a higher default rate any higher than that of middle-class homeowners).


      • Notice: Undefined offset: 180 in /nfs/c05/h06/mnt/72829/domains/warrenkinsella.com/html/wp-content/themes/warroom/functions.php on line 314
        Marc L says:

        I don’t disagree with most of what you said. My only point is that the issue is complex, and can’t be boiled down to simply blaming “the right”. In addition, whether Greenspan was a disciple of Ayn Rand or not has nothing to do with it — many “right-wing” economists at the time were worried that Greenspan was keeping rates too low for too long. Low rates were hardly a right-wing idea. But your point about subprime mortgages is incorrect. The vast majority of sub-prime mortgages were given to people who would not qualify for a prime mortgage — if they did they would not have been a problem and would not have had to foreclose.


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    Philippe says:

    He’s miraculously succeeded despite the Republicans purposefully & maliciously manufacturing crisis after crises by refusing to play ball- always hoping it will make him look weak & incompetent. All the Republicans know is how to say “no” rather than help fix the economy. The irony is that Obama’s such a great communicator that he’s successfully exposed them.

    If the Dems can take back the house in 2014, with the Republicons out of the way the economy will expand even faster. That will bode well for 2016.

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