Should President Obama Lose This Election Because of the Economy?

In 2008 when Obama took office, the economy was in a free-fall. By 2009 the fall was over and things turned the other direction. The slight plateau in 2010 was caused both by the debt ceiling crisis, and the European Financial Crisis. Even still the economy continues to grow.

In this election cycle we’ve heard a lot about the economy. Republicans have made the lack of jobs the center of their campaign strategy. R’s spend much of their time convincing everyone the economy is terrible and the president is to blame. D’s have run on the narrative that the stimulus bill kept America from the Great Depression 2.0, things are steadily getting better, but they need more time to work their plans.

What’s really going on? It’s not a short answer, and one of my chief frustrations is the inability of the normal workaday person to really understand the financial meltdown and all that happened after it. Unless you read the news all along, how do you catch up?

Yesterday I found a concise and informative info-graphic that can tell you the story of the U.S. economy for the past 5 years quickly and easily. If you read this it will help you to understand what really happened and thus not fall for the spin from the left or the right. Reading this could be the best 10 minutes you’ll spend this election season. I’ve done a summary here, but I highly recommend reading the entire infographic at good.is.

THE BOOM
In 2007 the economy was booming and everyone was confident – overconfident as it turns out. Investors and financial gurus were ignoring key data.

  • Growing gap between the rich and the poor
  • Financial system was growing beyond control
  • Housing prices were inflated
  • Healthcare costs were skyrocketing

The gap between the rich and the poor is an especially key problem…

THE BUILDUP
Income grew more slowly in the 2000s than in the previous thirty years. To compensate, people borrowed money – especially on home loans. Banks had so much cash (China was having their long over due industrial revolution & were flush with cash they invested in the American housing market), so those banks loaned to many folks who really shouldn’t have borrowed that much money. Everyone had too much confidence and too much debt.

THE CATALYST
First, there were some pre-existing conditions.

  • The dot.com bust of the late 90s
  • 9/11 happened
  • War in Afghanistan
  • War in Iraq

Then the sub-prime mortgage thing happened

  • People who shouldn’t get loans got them – millions of them
  • Banks sold those loans to investors
  • Investors used those risky bundled loans as collateral to borrow more money
  • With that borrowed money they bought more of the same risky loans
  • Banks bought insurance on the loans
  • Housing prices got way over-inflated
  • People who never should have gotten a loan in the first place, started to default
  • The house of cards fell down

2008
Nobody had money to spend so there wasn’t enough demand for goods and services. People started to lose their jobs, which meant there was less money and less demand, and fewer jobs. Less money > less spending > fewer jobs  > less spending… That was the downward spiral.

RECOVERY
The government stepped in, first with the Bush stimulus, which was too small. Then with the Obama stimulus which stopped the freefall. They also began to regulate the bankers – but they have not done nearly enough. Obama must be held accountable for that. If he loses this election, I think this will be why.

Here’s where the politics comes in. Obama wanted another stimulus package in 2010 – a combination of a version of the earlier stimulus money and a jobs bill. Instead the Republicans in congress locked the country in a battle over the debt ceiling that caused a downgrade of the U.S. credit rating. Our credit rating fell not because of our debt, not because of a mistake by Mr. Obama, not because of our struggling economy, but because the Republican controlled congress created a trumped up crisis to win political points.

Then the European markets collapsed and remain in trouble. Even so, over the past few years our economy is growing faster than pretty much everyone except China.

What does all this mean? You’ll have to decide that for yourself. To me, it means that the sky is falling narrative about the economy rings untrue to me. At the key moment when a jobs/stimulus bill could have been the final push toward a healthy economy, the Republicans in congress not only refused to work together with Democrats to get it done, they played a game of Russian Roulette with the debt ceiling and made things worse. Despite all of that the economy is headed in exactly the right direction. Two more years and we’ll be out of the recession and on much more solid financial ground.

Here’s a link to the info-graphic. I highly recommend giving it ten minutes. You’ll know a lot more about our economy after you do.

 

About Tim Suttle

Tim Suttle is a pastor, writer, and musician. He is the author of several books: Shrink: Faithful Ministry in a Church Growth Culture (Zondervan 2014), Public Jesus (The House Studio, 2012), and An Evangelical Social Gospel? (Cascade Books, 2011). Tim's work has been featured at The Huffington Post, The Washington Post, Sojourners, and other magazines and journals. Tim is also the founder and front-man of the popular Christian band Satellite Soul, with whom he toured for nearly a decade. He has planted three successful churches over the past 13 years and is the Senior Pastor of Redemption Church in Olathe, Kan. Tim's blog, Paperback Theology, is hosted at Patheos.

  • http://dennisbarr.blogspot.com Den

    Of course Obama should lose the election over the economy…

    He was the candidate of “Hope and Change,” and “Yes we can!” It’s become obvious over these last four years that we can’t. He hasn’t been able to wave his magic wand – which I know he has hidden away – and make all our problems disappear. Why? It can’t be because the Republicans have almost universally opposed everything he’s done – surely he could have surmounted that. It can’t be because of the miserable situation in place when he came into office – hope and change, remember? Look – we expected perfection. What did we get instead? Just another politician…

    But seriously – he may well lose because of the economy. Things haven’t improved enough, and fast enough, for a lot of people. People have short memories these days, and they’re hungry for some sort of miracle. They’re willing in large numbers to vote for the candidate who promises the proverbial “chicken in every pot.” Mitt Romney the Miracle Worker is promising the modern-day equivalent of that, and that promise may be just what will get him into office. The fact that it’s based almost totally on a fantasy is not at all detrimental to his appeal.

  • Frank

    Of course he should lose because of the economy, not to mention terrible foreign policy and terrible domestic policy.

  • MattF

    Terrible foreign policy? Maybe. But it’s certainly better than his alternative, who’s managed to insult the British, the Spanish, the Palestinians, and the Russians without even being elected yet.

  • Dutch

    Nice try with your class warfare argument.
    The economy sucks and is the slowest recovery on record.
    Also Gitmo Bay is still open thanks to the Everlasting Jobstopper.

  • http://patheos Carol

    YES, he should lose because of the economy. I remember his comment, “I guess shovel ready wasn’t so shovel ready”. Almost 1 trillion dollars wasted. And our President thought it was funny! That must now be paid for by our grandchildren. He has fixed nothing. The water hasn’t stopped rising, just like the gas and food prices keep rising. People can hardly survive in todays economic conditions. And contrary to what the media and Hollywood keep reporting, my main concern as a woman is not my “lady” parts. Another slap in the face to woman!

  • http://www.amazon.com/dp/B0099YS0XM Joe Neubarth

    Right now the Federal Reserve has spent 41 TRILLION Dollars trying to undo the international damage brought by the last Republican Administration. That is 41 Trillion that the American Taxpayers will have to repay. That is in addition to our 17 Trillion national debt, run up by the Satanic Republicans to fight all of those foreign wars. Bush oversaw 12 Million manufacturing and Industrial jobs disappear overseas because rich Republiscam company owners wanted to cut their labor costs. I have not seen the Republiscams bring those jobs back yet. To compensate we have had to create Service Sector jobs, but those jobs pay about half what the manufacturing and Industrial jobs paid. We have a Big Problem. Bush left us 58 Trillion Dollars in debt with no way to get Big Business to return the jobs to Americans. The Republiscams in Congress continue to block any jobs bills. I am about ready to support a revolution. How about you?

  • scott stone

    Decent analysis but a bit simplistic. The two numbers that I look at that reflect where the economy is at and how well an administration is doing are U6 unemployment and GDP. Overall GDP for 2012 will probably be lower than any other year of Obama’s presidency. Q2 of 2012 is worse than it was in 2011. U6 unemployment is above 14%. The labor participation rate is at historically low levels and is actually continuing to go down.
    Spend some time reading the American Recovery and Reinvestment Act. You will be shocked at how much was spent on things that had no ability to stimulate an economy the size of ours for an extended amount of time. All one needs is a discerning eye and a willingness to be critical even if it goes against their biases. The stimulus bill like the ACA were poorly written, They are both an indictment of someone who does not have the skill set to be president.

  • Tim Suttle

    Hey Scott, I’d be interested to see if you think that might have anything to do with the growing gap between the rich and the poor? The concentration of wealth and power with the rich is at historically high levels, the tax burden on the rich is at historically low levels. The biases cut both ways.

  • Scott Stone

    If the concentration of wealth is at historically high levels and the tax burden on “the rich” (a phrase which is now a pejorative) is at historically low levels, is this also an indictment of Obama? After all he has been president for the past 4 years.

  • scott stone

    Just having some fun with that last post. Yes I think that has a lot to do with the increased gap between rich and poor. Median family income is now 8.1% lower than it was in 2007. This is a result, in my opinion, of the recession that occurred and poor economic policies implemented.
    But tax policy, at least as Obama views it, will not help our economy. Here is my frustration with left leaning individuals in regards to economic policy. First let me state that I probably agree with Obama on a plethora of issues. I’m not one of these right wing ideologues. I’m for universal health care, gun control, a more viable social safety net, etc. But his economic policy positions and those on the left are confusing to me.
    Lets take taxes and “the rich.” I’m in agreement that tax rates on upper income earners are at historically low levels. I also know that revenue to the treasury via income taxes (which still is the largest revenue source) is proportionately payed more by these same individuals. The top 10% of income earners, those nasty rich people, pay 71% of all federal income taxes.
    I fundamentally disagree that they aren’t paying their fair share. And let’s same I’m wrong. How does increasing the tax liability on these individuals help the poor. It may shrink the income gap but in a nonproductive way. The rich will be a little less rich but the poor will still be poor.
    Let’s take tax policy and the deficit. I’ve made this point so many times I can’t count. Many on the left simply refuse to acknowledge facts. I can put it on paper and they still don’t care. Raising taxes on the rich would result in a FY2012 deficit of $1.02T instead of $1.1T. I firmly believe that most on the left want taxes to go up for the rich just to make themselves feel better. I’m not sure what they will feel better about but there really doesn’t seem to be any logical reason.
    I’m an open minded individual. I want to be challenged on how I think about issues. It’s just nobody is willing to take these specific issues an explain to me the fallacy of my thoughts. I’d love to know where I’m wrong.

    • Tim Suttle

      Scott, you make a fair point. “It may shrink the income gap but in a nonproductive way. The rich will be a little less rich but the poor will still be poor.” You may well be right. But what is that alternative? Do we continue to keep the system rigged against the poor, in favor of the rich, and hope the rich grow a conscience? Because I don’t see that working either.

    • Claude

      I firmly believe that most on the left want taxes to go up for the rich just to make themselves feel better.

      I firmly believe that most on the right want taxes to remain at historically low rates for the rich just to make themselves feel better. Anybody can play this game!

      “Spending needs to get under control.” This is the conservative mantra during Democratic administrations that suddenly vanishes when the budget-busting GOP is in power. Dick Cheney assured us that “deficits don’t matter” and indeed the Republican record on exploding the debt is far worse than the Democratic (see Bill Clinton’s Democratic convention speech). Yet propaganda says that the Democrats are feckless spenders, so it must be true. By the way, the government shrunk during Obama’s administration.

      The majority of Americans consistently express a conviction that “the rich” should pay their fair share of taxes. This doesn’t translate into hating on the rich and “job creators,” as the right wing ceaselessly complains. It is a matter of fairness.

      Incredible that this race is even close with a cynical shape-shifter like Romney and a fantasyland ideologue like Ryan on the GOP ticket. So, no, Obama shouldn’t lose on the economy. Romney/Ryan should lose on the merits.

  • scott stone

    One more thing, other than the fact that I need to start proof reading before I hit post. I’m for the Obama tax cuts expiring. All of them need to expire across all incomes. With a diverse and growing population and a growing (hopefully) economy, revenue does need to increase. But spending needs to get under control.

    • Tim Suttle

      for sure – spending needs to come down. but cutting entitlements without cutting defense can’t get it done.

  • http://martinhanl@aol.com martin

    Let’s not forget that President Clinton was the President who repealed Glass-Stegal;that piece of legislation that stood for well over 67 years was put into place by F.D.R. to prevent the fiasco of the recent crash of 1929…who repealed it? a Democratic President,who also brought in N.A.F.T.A, that helped destroy millions of entry level paying jobs in manufacturing and shipped them to Mexico,China and other places ;once again the handywork of Bill Clinton and his host of Limousine liberals as Robert Rubin and Larry Summer’s. So it’s really not all the big bad Republican’s fault for this Financial fiasco of 2007 that we are led to believe. And when I tune into the election it seems that the Democratic party is talking about wedge issues as abortion,and contraception which has been legal since the 1960′s and Gay marriage and infringing Religious freedom….I thought they were going to brig people together!! What ever happened to the party of F.D.R. and J.F.K….where did it go???????

  • http://pop will

    the economy has been going down the drain long before obama came into office. i mean the man has tried to do things but Americans are so redneckish and afraid of new things. like universal health care a beautiful idea. that would help us a lot. but Americans just see it that.( agh nah they aint takin my moneys from ma ) its silly really. i hear people all the time talking about how the president is tring to make the US a socialist country. well i goot bad news for you guys we are pretty much a socialist country. look 47% of us dont make enough money to pay taxes, so they get money back every year, food stamps, WIC, all the inmates we support, section 8 housing, disability, ssi the list goes on and on their are so many hand outs, free rides. its silly and like i said before on other post what differance is it gonna make whos in office as long as you have the same politicians in their vetoing every good bill that goes that way. why dont we focus more on getting them all out of their and giving our president a fighting chance. so lets get some new politicians in them cozy chairs people


CLOSE | X

HIDE | X