It is Still the Economy, Stupid

Guest Columnist | 6/21/2012, 11:27 a.m.

During the 1992 presidential campaign, Bill Clinton campaign strategist James Carville coined the phrase, "It's the economy, stupid." Now in the midst of the economic recession that began in 2007, the mantra for the 2012 presidential election is once again, it's the economy, stupid.

Unfortunately, the presumptive Republican nominee Mitt Romney remains focused on the simplistic, the obvious, and the misleading. Romney prefers to offer out of context distractions by hammering the president for saying "the private sector is doing fine" when the real issue is job creation.

In his recent stump speech in Cincinnati, Romney said, ""Don't forget, he's been president for three and a half years. And talk is cheap. Actions speak very loud...If you want to see the results of his economic policy, look around Ohio, look around the country." The problem with Romney's analysis is the economy in Ohio is on the rebound.

President Obama is hamstrung by China's currency devaluation that makes American exports more expensive, the Euro-zone financial crisis, and a recalcitrant Congress. He is offering temporary tax-cuts and increased government spending to create jobs but a Republican led Congress refuses to give President Obama (or the American people) anything that will result in an improved economy. In his recent speech in Cleveland, President Obama clearly made the point very clear, "...What's holding us back is a stalemate in Washington between two fundamentally different views of which direction America should take. And this election is your chance to break that stalemate."

As bad as the American economy is, neither candidate is speaking to the longer-term structural issues that will plague Americans, especially the middle-class, for decades to come. The top three systemic economic problems for America are structural long-term unemployment, reduction in median net worth and poverty.

As bad as 8.2 percent unemployment is (13.6 for African Americans), according to the Bureau of Labor Statistics, "The number of long-term unemployed (those jobless for 27 weeks and over) rose from 5.1 to 5.4 million in May. These individuals accounted for 42.8 percent of the unemployed." The number of Americans who have taken themselves out of the labor force rose in March to an unprecedented 88 million, exacerbating the long-term structural unemployment problem. This represents nearly one-third of the American population.

What is even more sobering than the unemployment figures is the impact that the recession has had on wealth accumulation, especially for the middle class. According to the Federal Reserve, median net worth of family income fell 38.8 percent between 2007 and 2010. This decline did not impact the wealthiest Americans nearly as much. "The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median were relatively muted," the Federal Reserve stated. "Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices".