On Tuesday evening President Obama gave his State of the Union message to Congress and the nation. The President’s performance was political theatre designed to obfuscate the true economic and financial position of the United States. If the President had analyzed the key statistical data on the economy and federal finances, and had been candid, he would have made a very different speech.
My fellow Americans, the performance of the US economy and government finances over the past four years has been a major disappointment. My policies of increasing government control over the economy and the lives of individual Americans did not deliver the performance that I promised the American people. However, I still believe these are the best policies for us to follow in the future.
When I took office in January 2009, the economy was in the worst recession since the great depression. Despite record stimulus spending and aggressive monetary policy by the Federal Reserve Bank, the economy grew at a disappointing 1.5% per year. This is half the post war growth rate of 3%. This is also substantially below the post war recovery growth rate of 4-6%. Unfortunately, during the fourth quarter of 2012, the economy actually contracted by a small amount.
The average post war economic recovery occurred in less than a year and a half. After 4 years we are still waiting for a convincing economic recovery. I am certain that if we continue to spend even more stimulus money, the recovery will come before I leave office in 2016.
Let me be clear that I follow the advice of the best left wing Keynesian economists in the country like the Nobel Prize winner writing op-eds in the New York Times. They advised me to borrow in excess of $1 trillion a year to finance deficit spending to stimulate the economy. Spending borrowed money for current consumption may appear improvident to you and even to me. However, I defer to recommendations of these Ivy League pedigree economists who are above my pay grade rather than the recommendations of the business community. The economists are smarter than business men and women creating jobs in the private sector.
As you know, my policies are designed to help the middle class. Even more disappointing than the generally mediocre performance of the economy, the median family income declined 3% from $52, 546 in 2008 to $50,094 in 2012. I recently implemented a tax increase on people with excessively high current incomes, which will redistribute some of their excess income to the middle class so that I can report an increase in median family income next year. I am aware that much of this income is derived from ownership of small businesses, but my advisors, like billionaire investor Warrant Buffett, assure me that patriotic rich Americans will gladly pay for these taxes entirely by reducing their personal spending rather than pulling back on re-investment in their businesses.
I also hope to raise the median family income by passing a new higher minimum wage law. Businesses with $7.25 hour labor will have to pay an additional $1.75 an hour. This increase is expected to increase the wages of millions of workers at the low end of the pay scale. I also expect these patriotic rich businessmen to absorb the increase in wages without passing the higher cost of labor to you the consumer, which might cause you to buy less of their product and thus result in layoffs.
I wanted to raise the minimum wage to $50 per hour so that all American’s can be upper middle class. However my economic advisors advised against it because that rate would significantly reduce employment. Unfortunately they could not explain to me why a minimum wage of $50 per hour would kill jobs but $9.00 will not. I guess it takes a PhD and a Nobel Prize in economics to understand.
I am sorry that your commute to work and heating your house has become more expensive over the past four years. The price of gasoline increased from $2.25 per gallon in 2009 to about $3.40 today. Dr. Steven Chu, our Nobel Prize winning Energy Secretary, assured me that $10 gallon gas, government investments in failing solar energy companies and electric cars, closing public land to oil drilling, and killing the Keystone Pipe line would improve America’s energy supply. Let me assure you that these policies will eventually result in lower energy costs. Please be patient.
After spending two years getting Obamacare passed in my first term, I now realize that too many Americans are unemployed. Unemployment increased from 7.3% when I took office to 7.9% today. Obamacare should help unemployment in America. Since more Americans will have access to health care, new jobs will be created in the health care sector. It does not matter that increased insurance costs to pay for Obamacare will reduce profits in the private sector. Warren Buffett assures me that patriotic businesses will absorb the costs and not pass them on to employees in the form of lower wages and customers in the form of higher prices. These are the same patriotic business people willing to absorb the $1.75 increase in the minimum wage without raising prices or cutting back hours.
Youth unemployment is a serious waste of America’s future talent. During my first term of office, youth unemployment increased from 12.8% to 16.5%. My Nobel Prize advisors tell me that raising the minimum wage by $1.75 will have no material adverse impact on youth unemployment. I know that Americans who hire their teenage neighbors to cut grass or to baby sit at the minimum wage will be happy to pay an extra couple of dollars an hour. These patriotic Americans will not cut the number of hours their teenage neighbor works merely because they will have less money to spend on their weekly restaurant visit with their spouse. Of course the restaurants that they patronize will miss the business, but the owner will be willing to absorb the loss of business without reducing his employees’ work schedule.
I know some Americans are disappointed that we have not reduced the budget deficit. Prior to my taking office, the budget deficit was a record $459 billion or 17% of government revenues! The national debt was $10 trillion or $33,000 per American. You may recall that I harshly criticized President Bush for this outrageous deficit and promised to cut it in half.
I am happy to report that after four years of budget deficits in excess of $1 trillion, my next budget will be under $1 trillion. We have reduced the projected deficit by increasing taxes on the rich. Of course, the rich will have to make as much as they did last year in order for us to actually collect these higher taxes. My advisors assure me that taxable income will not decline from increased labor costs, increased Obamacare costs and rich taxpayers reducing their taxable income to avoid higher taxes. I hope to increase these taxes even more in the near future to further reduce the deficit.
Some of my colleagues on the other side of the aisle think that we should reduce the deficit by cutting spending. In particular, they want to reduce entitlement spending. Entitlement spending is 58% of the budget and expected to grow at 6-9% a year as the baby boomers retire. We can’t cut that because the boomers paid into the system and will vote us politicians out of office if we touch it. Interest spending is nearly 8% of the budget even with record low interest rates. We must pay the interest or we will not be able to borrow any more money in the private markets. S&P has already reduced America’s AAA credit rating because our national debt has increased to $16 trillion or $51,000 for every American, which is 101% of our annual gross domestic product. (You’ll be glad to know that we are suing this unpatriotic rating agency for its outrageous business practices during the mortgage boom, even while we ceased to investigate similar business practices by the patriotic rating agencies that did not cut our ratings.) I have already cut defense spending so much that the professional military pigs and their allies are squealing.
Therefore we must continue to raise taxes. Unfortunately, the rich do not have enough money to pay for the deficit. Even if we take 100% of their earnings over $500,000, that will not cover the deficit. Therefore we must eventually tax the middle class if we are to begin to cut the long-term deficit.
As you can see, my policies will continue to lead to stagnant growth, high unemployment and large government deficits for the foreseeable future. However, your government will be there to take care of you if you are sick, unemployed, retired or do not make enough money. You only have to give up the American Dream of prosperity through hard work and individual initiative.