The Wall Street Journal claimed President Obama has failed to produce policies that encourage economic growth, ignoring the effects of government spending and the fact that Obama has proposed pro-growth policies only to be met with Republican opposition.
On July 24, President Obama delivered an economic speech at Knox College, calling for increased government investment in education and infrastructure.
Responding to the speech, on July 25 The Wall Street Journal ran an editorial criticizing the president's economic policy, claiming it has focused too much on "on reducing inequality rather than increasing growth." The Journal went on to claim:
The core problem has been Mr. Obama's focus on spreading the wealth rather than creating it. ObamaCare will soon hook more Americans on government subsidies, but its mandates and taxes have hurt job creation, especially at small businesses. Mr. Obama's record tax increases have grabbed a bigger chunk of affluent incomes, but they created uncertainty for business throughout 2012 and have dampened growth so far this year.
While the Journal listed off many policies that it inaccurately contends hurt growth, it failed to mention what economists identify as the greatest drag on economic progress -- reduced government spending.
In almost every quarter for the past three years, the slowdown in government spending has been a drag on GDP growth. For example, growth in the first quarter of 2013 would have been almost a full percentage point higher if government spending had not contracted.
Indeed, a number of economists have pointed to decreased government spending as the primary culprit behind slow growth, with undue focus on reducing deficits distracting from the real need for increased employment.
Another fact the Journal failed to recognize is that Obama has proposed a number of policies that economists contend would increase growth -- such as the American Jobs Act and increased infrastructure spending -- only to be met with Republican opposition.
The Wall Street Journal's latest editorial falls in line with its documented history of ignoring the positive economic effects of government spending.