After campaigning hard for his new soak-the-rich tax increases, President Obama—er, I mean President Franklin D. Roosevelt—won reelection in 1936. A solid Democratic Congress dutifully passed the tax hikes, which quickly led to what’s known as the “Roosevelt recession” of 1937. If President Obama wins his reelection bid and gets his tax increases implemented, we will get the “Obama recession” of 2013.
The last recession has been officially over for more than three years, though it certainly doesn’t seem that way to millions of struggling and unemployed Americans; and the country is perilously close to falling back into another.
While the president boasts of steady, albeit slow, economic growth:
- The economy only added 96,000 jobs in August, down from 141,000 in July and a January-March average of 226,000 a month;
- Applications for unemployment benefits rose from 367,000 in August to 382,000 (though economists think some of that increase was due to Hurricane Isaac);
- Manufacturing declined for the third month in a row in August;
- And U.S. rail traffic, a leading economic indicator, was down 3.4 percent from the same period in 2011.
The economy is staggering under the load of Obama’s policies, making it increasingly likely we will soon slip into a double-dip recession.
The Federal Reserve Bank is so concerned that it jumped back into the economy with its third quantitative easing (QE3). Indeed, the recent housing-market uptick may be a result of the Fed’s easy-money policies—which, ironically, arguably led to the housing bubble that initiated the 2007 recession.
But the Fed’s efforts to flood the economy with money—$2.3 trillion since 2008—won’t save us from another recession, and may actually exacerbate the problem, if companies and entrepreneurs refuse to invest in new opportunities, equipment and people. That’s what happened in 1937 with Roosevelt’s reelection, and it will happen again if Obama is reelected.
There are at least three reasons why an Obama victory will almost surely lead to a recession in 2013: