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14. OBAMA STRIVES TO "CHANGE" AMERICA

THE OBAMA ECONOMY

CONTENTS

Government grants

Bankruptcy in the auto industry

"Cash for Clunkers"

The rising national debt

"Obamacare"

The national debt continues to climb

The textual material on this webpage is drawn directly from my work
        America's Story – A Spiritual Journey © 2021, pages 439-443.
GOVERNMENT GRANTS

Obama inherited a national economic mess in coming to office at the beginning of 2009.  Bush's emergency loans enacted during his last months in office seemed to slow up the disaster rocking the banking industry.  But America's "Big Three" auto manufacturers (General Motors, Ford and Chrysler) were still in deep trouble.  And Obama agreed that they would need some additional funding to get through the crisis.

But what he actually called for in taking immediate action on the nation's economic crisis with his $787 billion American Recovery and Reinvestment Act in fact was not loans to help American businesses to get back on their feet but instead a simple giveaway of government funds for expanded unemployment benefits, health care, green energy, education, infrastructure development and various job creation programs.

Again, the Republicans balked at this, seeing the roots of rising Socialism and not just assistance to a hurting corporate world in the program.  But the Democrats were delighted.  America was back to doing "New Deal" programming like those of the Roosevelt and Johnson administrations.  Thus the measure passed quickly in Congress (late January of Obama's first weeks in office), 244-188 in the House and 61-37 in the Senate – almost entirely along Democratic-Republican party lines.

BANKRUPTCY IN THE AUTO INDUSTRY

As far as the troubled auto industry was concerned, Chrysler was on the verge of bankruptcy – and General Motors was not far behind.  In February, an agreement was made with the two companies that in receiving $20 billion in funding, they would close five plants (and 50 thousand jobs) and shut down hundreds of local dealerships.  But in April, Chrysler filed for bankruptcy anyway, with Fiat agreeing to gradually come in alongside Chrysler as partner to rebuild the company. Then in June, General Motors also filed for bankruptcy, with the U.S. government taking 60 percent ownership of the company, the Canadian government 12.5 percent and the rest going to the labor unions.  The original stockholders (a lot of them members of Middle America) were left out in the cold in the deal.

"CASH FOR CLUNKERS"

("Cash for Clunkers") in which the government would offer from $2500 to $4500 towards the purchase of a new car, by turning in gas-guzzling cars (trucks and SUVs mostly) and buying smaller, more fuel-efficient automobiles.  Thus since trucks and SUVs were American car companies' big income earners, "Cash for Clunkers" merely served to worsen the situation for the American companies, at the same time benefiting greatly the Japanese, Korean and German car manufacturers making the smaller sedans.  Furthermore, almost $1.4 billion in car value was lost over any fuel-efficiency gain, because these "clunkers" exchanged in the deal could not be resold, but instead had to be destroyed, cutting back enormously the number of used cars that poorer Americans looked to for purchase.

THE RISING NATIONAL DEBT

And of course all this government giveaway merely increased enormously the national debt, already doubling from $5 trillion to $10 trillion in Bush's eight years and now rising even more rapidly in these first years of Obama's presidency, with $1.9 trillion added to the figure in 2009 and another $1.7 trillion in 2010.  At this point the government deficit was calculated to be about 94 percent of the nation's total productivity, up from the 57 percent figure it stood at when Bush first took office in 2001 and 70 percent when Obama took office in 2009.  The government debt, now running close to the full value of the nation's productivity, was a very dangerous economic indicator.

And still it had little impact on the poor showing of the American economy, whose official unemployment rate was rising, from 9.4 percent in 2009 to 9.9 percent in 2010, a figure which would actually have been much higher (around 15.9 percent) if those who simply had given up looking for work altogether (and thus no longer on the books) or were merely able to find part-time work were added into the calculation.

"OBAMACARE"

At the same time, the American medical industry was in crisis mode, although not because the health industry was in financial difficulties, but because ordinary Americans seeking medical help were finding it financially impossible to meet skyrocketing healthcare costs.  The American medical industry boasted about the sophistication of the industry itself in comparison to the European healthcare industry.  But the fact of the matter was that Europeans could receive rather normal medical care without being thrown into deep debt, whereas for many Americans just a 15-minute visit to the local doctor cost the equivalent of a full day's wages, making medical visits as rare as possible.  And costs for a single night's stay in a hospital could easily amount to a several months of a person's income.  Worse, problems that required a "lengthy" stay (meaning more than a day or two) in a hospital could run costs up into the $millions.

Of course there was medical insurance to cover those enormous costs.  But Insurance companies were not in the charity business and covered expenses by way of very expensive insurance premiums available to the Americans.  And those costs were rising rapidly.

And what did these rapidly rising costs have to do with "improvements" in the medical industry?  With insurance costs rising 5 to 10 percent annually, did this imply that healthcare was also improving at that rate?  What was driving up these costs?  And the answer can only be, greed on the part of those involved in the industry – fancy hospitals, high-status doctors, wealthy insurance companies, but probably most of all, medical liability lawyers who were more than happy to bring a client's lawsuit against any doctor who made medical mistakes (doctors are not supposed to make mistakes, even though medical analysis is a highly risky matter).  The rewards for the medical "malpractice" industry ran medical costs up into the clouds.

But this meant that the problem was more that of a social or ethical matter than a political or governmental matter.  Nonetheless, Obama would attempt to take the problem head-on with his July 2009 1017-page document (which no Congressman had the time or ability to read in its entirety) Affordable Care Act (ACA) – or "Obamacare" as it was popularly termed.  Again, Republicans balked at the bill, especially the part that proposed to put a government health plan into effect in competition with the private health insurance companies – Republicans claiming that this would give the government the power to drive those companies out of business and leave the country with only a government or "Socialist" medical program for the country.  Also the Congressional Budget Office's analysis revealed that this would run the government deficit up another $1 trillion, minimally (if not even more than that figure).  And polls were indicating that the American voters themselves were deeply concerned about what this "change" in the American medical industry would mean to them personally.  Democratic Party House Speaker Nancy Pelosi's comment "just trust us" was not very reassuring to the general public.

Thus the fast action on this bill that Obama was hoping for just simply did not happen.  By the end of 2009 only the Senate had passed the bill, 60-40 (along party lines), and at that point it was greatly changed, having dropped the government insurance program option.  When early the next year (2010) the House finally voted on the measure, it narrowly passed with a 219 to 212 vote.  On March 23, Obama was pleased to finally sign his signature Obamacare bill into law.

In the end, although Obama had his law, he forfeited a lot of popular support in the deal.  And in the Congressional elections that November, the Democrats lost their majority to the Republicans in the House, the latter picking up 63 seats, the biggest swing in party fortunes since the 1938 election.  With Republicans now holding 242 seats to the Democrats' 193 seats, Obama had lost his former position in the House.  But this was also when he pushed to overturn the "don't ask' don't tell" rule in the military, before those 242 Republicans could take their seats in January of 2011 and he would no longer have full control of Congress.

THE NATIONAL DEBT CONTINUES TO CLIMB

By August of 2011, the government debt was approaching its debt ceiling, preventing the government from borrowing (selling bonds) beyond that figure.  But the Republicans were much opposed to simply adjusting upward the debt ceiling, and instead wanted government spending to be brought under reduction in order to bring the budget closer to a balance of income versus spending.  It was even proposing a constitutional amendment requiring government spending to stay within the limits of its income.

But all this speculation was making investors very nervous, and even the global stock markets began to take big hits.  Worse, Standard & Poor downgraded the U.S. credit rating from a solid AAA to a reduced AA+, the first downgrade since 1919.  Ultimately there seemed nothing left for the Republicans to do except to give in to the inevitable:  the debt ceiling would have to be raised in order for the government to continue its operations.  It repositioned the figure at $14.5 trillion, a new ceiling which government spending quickly reached by the end of the next year (2012).

But at this point increased borrowing had simply become a debtor's habit for the government, and the debt ceiling had to be "temporarily" suspended in 2013, then again in 2014, again in 2015.  By the end of Obama's presidency in January of 2017, the national debt had reached the figure of nearly $20 trillion or 104 percent of America's annual productivity – the debt having also doubled, like Bush's administration, in Obama's eight years as president.



Go on to the next section:  Obama's Foreign Policy

  Miles H. Hodges