It is no secret that many have been predicting a Romney victory for several months. While the polls leading up to election night showed a dead heat, very few predicted that Democrats would come out the way they did (preliminary numbers showed +6 Democrats at the exit polls). Whether this article was going to be about Mitt Romney’s first term or President Barack Obama’s second term, the numbers do not change. A politician cannot create jobs, but he or she can influence the environment needed to encourage job growth. Regardless of which candidate won, these are the numbers that need to be achieved for a successful term.
Gross Domestic Product (GDP) must reach 5 percent year to year at least once in President Obama’s second term. While 5 percent sounds quite high compared to the dismal sub-2 percent growth that we have seen, it is achievable. During the Reagan administration, the federal government had to intentionally devalue the U.S. dollar to keep exports competitive on a global scale, because GDP was growing at more than 9.5 percent year to year.
Bring unemployment down to 5 percent or lower. With unemployment still an issue facing many Americans, we need to get our nation back to work. By doing so we will also be able to make necessary cuts to social welfare programs that have become beyond burdensome to our federal government.
Bring U6 unemployment back to below 10 percent. U6 is a published government figure that I feel more closely resembles national unemployment. It includes the same numbers factored into U3 (the official rate) and also factors in people looking for full-time work who have to settle for a part-time job, as well as people who are not working but have indicated they wanted a job in the previous 12 months. These workers are referred to as “marginally attached workers” or “discouraged workers.” President Clinton was able to bring U6 down to roughly 7 percent from 12 percent from 1994-99. If President Obama were to accomplish this goal at the same rate, U6 would be somewhere between 8 and 8.5 percent.
Fuel prices must come back down to the $2-$2.50 range. Studies have shown that we have more than enough oil and natural gas in our own country, but we lack a political will to issue permits and retrieve those resources. The number of drilling permits issued on federal land dropped 40 percent from 2007-11.
While there is still an offshore drilling ban in U.S. waters, President Obama has been content to provide funds and support to help develop Brazil’s oil industry, a move that would not lower U.S. prices.
No more budget deficits. Our deficits have exceeded $1 trillion every year for the past four years. This is an unacceptable and unprecedented rate of spending that must be stopped. If deficit spending in the next four years surpasses $500 billion, it will be considered a failed term.
No more federal debt added. The federal debt is not a problem yet, but it is certainly on its way to being a major problem. The government needs to either increase revenues in order to fund its spending (or start paying down some of the debt), or cap spending to a reasonable level. The only viable option for the federal government to raise revenues would be through expanded payrolls. Raising taxes will not work. The proposed tax increases would not even begin to fund federal deficit spending, let alone cover it.
Do not blame the previous administration. “Blame Bush” may have been bought by the public for the first four years, but for the next four President Obama can only blame himself. Had Romney been elected, blaming President Obama would not have been acceptable, and Obama continuing to pass the buck will not be tolerated either.
These are not partisan issues, but economic issues that need to be resolved for the U.S. to get back on track. I hope that President Obama can make his second term a success and the U.S. economy can thrive again.
Ben Treece is a 2009 Graduate from the University of Miami (Fla.), BBA International Finance and Marketing. He is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and a stockbroker licensed with FINRA, working for Treece Financial Services Corp. The above information is the express opinion of Ben Treece and should not be construed as investment advice or used without outside verification.
