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U.S. economy not fixed, another crisis brewing

By PETER MORICI, UPI Outside View Commentator   |   Nov. 15, 2013 at 10:01 AM   |   Comments

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COLLEGE PARK, Md., Nov. 15 (UPI) -- Even Walmart is too expensive for recession-battered America.

Everyday low prices are no longer enough -- middle-class consumers are fleeing to Dollar Stores to stretch shrinking paychecks. Yet, Democratic politicians and economists who fashioned their failed policies tell us the U.S. economy is on the mend.

Janet Yellen at her confirmation hearing bragged that the U.S. economy has created 7.8 million jobs and assured senators it's just a matter of time before the Federal Reserve stops printing money to purchase $85 billion in government debt.

Incidentally this funds U.S. President Barack Obama's stimulus spending and reckless expansion of government into healthcare.

Yellen reassures us that Fed policymakers are just waiting for the right moment.

That may be when hell freezes over because Obama's spending and borrowing are visiting Eurosclerosis on the United States: slow growth, high youth unemployment and a level of debt that will force presidents in the next decade to either dry-dock the U.S. Navy and stand down the Army to pay all the interest and the entitlements he has created.

Washington will have to dramatically curtail most federal spending for road building, medical research, education and support for law enforcement to maintain the barest levels of government administration.

Welcome to Italy's or, worse, Detroit's woes, generalized across the United States, where it takes nearly an hour to summons police in an emergency.

Since unemployment peaked at 10 percent in 2009, the economy has grown at a paltry 2.3 percent annual rate. By way of contrast, unemployment peaked at nearly 11 percent for Ronald Reagan and, over the same period as the current recovery, he delivered 4.9 percent growth and 12 million new jobs.

College graduates driving taxis during the Carter years found bright new futures and ultimately gave us the New Economy of the Clinton presidency.

Reagan tackled ailments that besieged the country, whereas Obama ducks the economic challenges that hold back growth -- a dollar that is overvalued, government regulations shutting down new oil and natural gas development offshore and on the North Slope, and business regulations that are more burdensome than effective.

Dodd-Frank is forcing small and regional banks to sell out to their larger brethren who take the virtually free money the Fed is stuffing on their balance sheets to gamble and worse. Consider JP Morgan's mammoth losses in the London Whale trading debacle -- and criminal activities. Many of its executives, and perhaps the bank itself, face criminal indictment according to the recent settlement of civil and regulatory claims with the U.S. Justice Department.

Economists across the spectrum propose reasonable solutions to the problems of Chinese and Japanese currency manipulation that swell U.S. store shelves and car showrooms with artificially-cheap, subsidized goods and steal jobs from American workers.

Printing lots of money and dolling out Medicaid and health insurance subsidies to families earning up to $100,000 a year, funneling money to states to hire more unionized workers to reliably vote Democrat and standing idle while the Internal Revenue Service terrorizes conservatives who criticize the president's policies won't fix what's broke.

The combination is a prescription for the decline, distain and despair that gave Europe fascism in the 1930s and, if the Democrats beat down the middle class enough, don't think it can't happen here.

American democracy has always stood on a foundation of individual initiative, personal responsibility and prosperity. Those are going away as Barack Obama changes America.

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(Peter Morici, an economist and professor at the University of Maryland Robert H. Smith School of Business, is a widely published columnist. Follow him on Twitter: @pmorici1)

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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