Democrats Don't Deserve Re-Election

The economy is burdened by deficits, trade imbalances and problems at the banks, and the Democrats' fingerprints are all over those problems.
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NEW YORK (

TheStreet

) -- President Obama relentlessly references the handiwork of George Bush to provide an alibi for the weak economy. But if deeds should measure who governs, the Democrats deserve the boot.

The economy is burdened by huge federal deficits, trade imbalances with China and horrendous problems at the banks, and the Democrats' fingerprints are all over those problems.

Democrats claim the Bush tax cuts and two wars caused Washington's fiscal mess, but the facts tell another story.

In 2007, when the Democrats took control of Congress, federal spending, with wars going in Iraq and Afghanistan, was 19.6% of GDP, and the federal deficit was a manageable $161 billion. For 2011 with the recession over, the Obama administration projects spending at 25.1% of GDP and, with the Bush tax cuts repealed for the richest families, a $1.3 trillion deficit.

The president and the speaker of the House promised temporary stimulus spending to jump-start the economy but indulged in massive permanent new entitlements and armies of regulators Americans simply don't want. That's why, despite squirrelly views on social issues, Tea Party candidates threaten Democratic incumbents.

The Great Recession was caused by huge trade imbalances with China, which destroys American jobs, and a culture of entitlement on Wall Street that defines good banking practices as anything generating big bonuses, the public be damned.

President Clinton negotiated China's entry into the World Trade Organization but gave the Middle Kingdom a pass on currency manipulation and other mercantilist practices. Now, those shenanigans have created a $250 billion bilateral trade deficit and encourage other Asian economies to follow suit, stealing 2.5 million manufacturing jobs.

President Obama has warned China the U.S. has options if it won't stop manipulating its currency, but he doesn't act. He is more concerned about his standing among international leaders.

Despite European recognition of the China problem, EU allies refuse to support Obama's diplomatic efforts. Worried about keeping his Nobel medal shiny, the President sacrifices American workers on the altar of global governance.

Repeal of Glass-Steagall happened during President Clinton's watch, with the cooperation of both parties. That permitted institutions making loans with federally guaranteed deposits to merge with Wall Street casinos that recklessly trade and hoist dodgy securities on investors to pay executives unconscionable bonuses.

Obama-Pelosi bank reforms added more inept regulators, but too-big-to-fail Wall Street banks are bigger than ever. Monopolizing the CD market, those behemoths are driving down rates the elderly receive on savings and paying themselves more than $140 billion in salaries and bonuses this year.

Now, big banks face charges of fraud and mammoth civil judgments for filing false titles and foreclosure documents that threaten to freeze up the housing market.

Meanwhile, small and medium-sized businesses can't get loans from Main Street banks, which are being squeezed out of business by the Federal Deposit Insurance Corp. and federally subsidized Wall Street competitors.

It's raw politics. Wall Street contributes heavily to Democrats, while Main Street bankers tend to be Republicans.

The Republican Pledge to America offers few solutions, but on their record, Democrats simply don't deserve the House speaker's gavel.

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Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.