What is obamanomics?
Obamanomics is a popular neologism used to describe the economic policies of the administration of former American President Barack Obama.
The term is commonly associated with the economic stimulus packages adopted by the Obama administration in response to the Great Recession of 2008.
Key points to remember
- Obamanomics is a neologism referring to President Obama’s economic policies.
- It is often associated with stimulus programs used to fight the Great Recession.
- Critics of obamanomics see it as an undue extension of the government’s economic role.
As is often the case in politics, the precise connotations of obamanomics will depend on the political opinions of the commentator in question.
For supporters of Obamanomics, the term is often associated with the Obama administration’s economic stimulus policies. Examples of these policies include the adoption in 2009 of the American Recovery and Reinvestment Act, which was an $ 831 billion economic stimulus package; and the US auto industry’s 2009 bailout, which was on the verge of collapse at the time. Other notable policies associated with obamanomics include increasing taxes on high income earners; the imposition of a cap, or “escrow”, on military and discretionary spending; and the adoption of the Patient Protection and Affordable Care (ACA) Act, 2020, also known as Obamacare.
For its detractors, the term Obamanomics has a connotation of increased public spending, taxation and regulations. Indeed, Obama’s detractors see Obamanomics as an unwanted expansion of the role of government in the economy. In this way, Obamanomics can be contrasted with Reaganomics, another popular neologism referring to the economic policies of former US President Ronald Reagan. While Obamanomics is associated with an expanded role of government, Reaganomics is associated with lower taxes, lower public spending and less regulation.
Use of Term Obamanomics
While some commentators use the term obamanomic in a positive or negative light, many use it to refer simply to President Obama’s economic policies, without necessarily having a positive or negative connotation.
Real example of obamanomics
Supporters of Obamanomics say that the dire financial situation of the US economy that greeted President Obama when he was elected to power in 2008 required a strong government response. These dire circumstances included a rising budget deficit, a collapsing housing market, a plummeting stock market, the seemingly imminent risk of a systemic collapse of the banking sector following the shocking bankruptcy of Lehman Brothers and losses of dramatic jobs.
Obama’s signature answer to these questions was ACA, which increased public spending by more than $ 800 billion for the decade from 2009 to 2019. Spending was focused on preservation and creation jobs that were threatened by the current financial crisis at the time, while also investing in areas such as health, education and civil infrastructure. ACA is an example of Keynesian economic theory in that it should have a stimulating effect on the economy.
In July 2020, a panel of economists was asked whether the ACA had caused US unemployment to drop compared to what would otherwise have happened, with 97% of respondents responding in favor of the motion. When asked if ACA is likely to outweigh its costs, 75% responded in favor.