It’s The Economy, Stupid!

By William L. Garvin

When Bill Clinton needed a central and unifying theme for his presidential campaign, he chose “it’s the economy, stupid.” Any challenger to the Obama administration would probably have similar success along that same line.

In the latest Rasmussen poll, consumer confidence is at its lowest point in two years. No wonder the President is out to “win the future”; he has apparently already “lost the present.” Only 21% of the Rasmussen respondents thought the economy was getting better while an overwhelming 60% thought it was getting worse. Undoubtedly the 21% have the quixotic belief that stock in windmills and high speed trains is the key to economic well being!

For those who forsake fantasy and formulate factually-based conclusions, the data is clear. The Billion Prices Project at the esteemed Massachusetts Institute of Technology says inflation is 3 percent HIGHER than a year ago. The Fed has insured this will continue by pumping (printing) nearly one trillion dollars of new money into the economy. Certainly this has helped the stock market but it has come at the cost of devaluing our money and raising the prices of food and commodities. The dollar dropped nearly 1% last week after following a similar 1% drop against other currencies the week before that. How does this translate to the middle class?

Everyone who buys groceries knows that the prices are up but they may be unaware as to exactly how much. Over the year ending in February, lettuce is up 36%; butter is up 29%; coffee is up 13%, and broccoli is up 21%. The trend line is upwards since in March, food went up another .8% in that month alone. This is the largest monthly increase in three years.

Everyone also knows that the price of oil and gasoline directly affects the price of growing, processing, and transporting food. There is no light at the end of this administration’s energy tunnel. On the day President Obama was inaugurated, oil was $37 per barrel and gasoline was $1.87 per gallon. Today, the respective prices are $111 per barrel and $4.04 per gallon. Again, the trend line is up but domestic oil production is down.

Maybe it’s because five deep water oil rigs have already left the Gulf of Mexico because of interminable Department of Interior delays. One Texas oil producer even declared bankruptcy. More recently, Shell Oil has scrapped plans to drill in shallow water off the coast of Alaska because the Environmental Protection Agency withheld critical air permits. Keep in mind that Shell has shelled out $2.2 billion for the leases alone and then invested five years and $4 billion dollars in exploratory costs. Look for unemployment to jump in the Beaufort and Chukchi Seas communities. However the feds did come up with billions to loan to oil companies in Brazil and liquid natural gas projects in Central America. That should certainly help the unemployment problems in those countries.

In the meantime, according to the Department of Energy’s “Energy Information Agency,” domestic crude oil production will decline by 50,000 barrels per day in 2011 and will decline an additional 190,000 barrels per day in 2012. EIA EXPECTS that production in the Gulf of Mexico will fall by 250,000 barrels per day each year over the next two years! There will be some slightly increased production elsewhere that will only partially make up for the Gulf shortfall. In the meantime, Mexico, Cuba, and China happily drill away in the Gulf.

Yes, it is the economy stupid. The United States has accumulated an additional $6 trillion in debt since Democrats assumed control of Congress in 2006. Standard and Poor’s is now likely to drop our AAA debt rating. Other nations are proposing that gold replace the dollar standard. Your house is worth less; your savings are worth less; food costs more and gasoline costs more. Unemployment stays above 8% despite the continually gerrymandered numbers. There is no way to defend a record that puts more and more of its citizens on a “bullet train to bankruptcy”!
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