United States President Barak Obama admitted recently that the U.S. is “the wealthiest nation in the world.” He made the comments in order to justify the expenditure of his proposed federalization of health insurance, which amounts to a massive new welfare entitlement financed with tax increases and higher insurance premiums.
Of course, as I have noted in earlier posts, the U.S. is neither a nation nor a nation-state, but a union of states. Regardless, the point is that despite the recession, which Obama and his supporters have attempted to portray as the worst since the Great Depression, he has admitted that the U.S. remains the wealthiest economy in the world.
Wealth is measured by economists in terms of Gross Domestic Product (GDP). Even though U.S. GDP has contracted in 2009 for the first time in many years (it even increased in 2008, even though some economists date the beginning of the recession as late 2007), the U.S. GDP is still larger -- by trillions of dollars -- than that of any other economy in the world.
The financial crisis of 2008 did cause the recession to become one of the worst since the Great Depression. Although it is true that it was the worst financial crisis, during which banks became reluctant to extend credit, a depression was avoided by swift federal action. It is not yet clear that the Panic of 2008 has been the worst economic recession, a title still held by the 1981-1982 recession, during which unemployment peaked at well over 10%.
Indeed, those same economists who declared the recession began in 2007 have just announced that the recession is already over -- before most of Obama's policies have taken effect. The same natural business cycle that caused the recession, albeit with some contribution from liberal policies that triggered the collapse of the mortgage industry, has caused its recovery, albeit with some contribution from tax rebates, lower interest rates and the extension of federal credit to the financial industry. In short, this recession was scary, but not proof of the failure of the free market system that would justify Obama's massive spending, borrowing and taxing
Nevertheless, it is worth considering Obama's point that the U.S. economy is so strong that even such a blow as the Panic of 2008, like September 11, could only temporarily weaken it and not even come close to allowing the next largest economies, as measured by GDP, to pass it in size.
If Obama realizes that the U.S. still has the wealthiest economy in the world -- by far -- and the recession is over, according to the economists he trusts, then he should save the 90% of his spending spree that he had insisted was a necessary component of his so-called “stimulus” bill but has not yet been spent. Those hundreds of billions of dollars are thus not necessary to stimulate an economy already in recovery and instead should be saved and used to pay down the debt or reduce taxes, which would promote long-term growth instead of risking another recession which would be caused by the higher taxes and inflation the economic stimulus would necessitate.
Although Obama and his liberal supporters are already making the dubious claim of credit for the economic recovery, we conservatives should encourage the opportunity be taken to rescind the most unnecessary parts of the stimulus spending, which would be good for the U.S. economy, for which both parties could share the credit, as when the Republican Congress rescued the Democratic President Bill Clinton from his economic mistakes. Otherwise, after claiming credit for the current recovery, Obama would not be able to escape the blame for the “double-dip” recession his inflationary policies would trigger.