No, it’s not the unending federal budget deficit. In some ways, it’s worse.

The Heritage Foundation reports:

[Thursday] morning’s depressing revised calculation of the growth of the economy in the first quarter of 2014 (–1.0 percent) makes it official: The Obama expansion is now $2 trillion short of where we would be if growth in this recovery had matched the Reagan recovery that started in 1982.

That is to say the average family would have about $5,000 more income each year to spend if it were not for this slow recovery. The Census Bureau reports that median household income is down by $1,800 since this so-called recovery began.

Worse, investment plummeted in the first quarter of 2014 by 11.7 percent from the same period in 2013. That was the biggest decline since the recession ended in 2009. Without investment, businesses can’t grow and wages won’t rise. Capital investment by businesses is a strong leading indicator of future prosperity.

The administration was quick to blame the dismal numbers on the cold winter and blizzard conditions in the Midwest and Northeast. But he 2013 growth rate was 1.9 percent, and the rate has been less than 2 percent for more than a year. Under Reagan, the growth rate during the expansion was more than 4 percent. …

We spent $830 billion on a stimulus stuffed with make-work government-jobs programs and programs to pay people to buy new cars, borrowed $6 trillion, launched a government-run health-care system that incentivizes businesses not to hire more workers, raised tax rates on the businesses that hire workers and the investors that finance businesses that hire workers, printed $3 trillion of paper money, shut down an entire industry (coal), and tried to regulate and restrain the one industry that actually is booming (oil and gas).

Is it really a surprise the government is underperforming and this is the worst recovery from recession in 75 years. Ideas do have consequences – especially bad ones.

What good has come from Obamanomics? Hopefully, we all have relearned a painful lesson that government spending, congressional taxing, Treasury borrowing and Fed printing don’t stimulate the economy.

This is on top of sharply higher food and energy prices, which are the direct result of Obama administration policies in such areas as hatred of cheap energy, promotion of expensive (that is, “green”) energy, and the weak dollar. The middle class experiences all this daily.

A new group called the YG Network observes:

Middle-class Americans continue to suffer in the Obama economy. Costs for everyday things like gas and groceries continue to rise, and long-term expenses like tuition continue to take large chunks out of families’ budgets.

And as far as healthcare goes, “more employees are getting hit with higher health insurance premiums and co-payments,” according to the new Aflac WorkForces Report.

It’s not surprising then, that the American people think that the economy is on the decline. According to Gallup’s Economic Confidence Index, a majority of Americans (55 percent) believe that the economy is getting worse, while only 40 percent believe it is getting better.

The liberal agenda isn’t working out for the middle class, because it focuses on pet projects without making any serious attempt to make life work better for hardworking Americans.

How do we know that the economy is taking a downward turn, irrespective of what Washington wants us to believe? Traveling around over the Memorial Day weekend, one observed a large number of campers and boats, along with some motorcycles, for sale. Those are all relatively big-ticket items, but they are paid for with disposable income, and visual evidence says people are disposing of items purchased with disposable income.

How do we know the economy hasn’t been doing well for a long time? Consider this: The financial planners say a family should buy a car whose price is no more than half of its annual income, and buy a house whose price is no more than twice of its annual income. The median income of a Wisconsin household in 2012 was $51,039 (yes, less than the national average.) The average price of a new car in March 2012 was $30,748, which is more than half of said median household income. The median price of a house in Wisconsin in 2012 was $133,900, which is closer to three years of income than two years. Since incomes have grown negligibly but prices have not since 2012, if you go by standards of responsible financial planning most Wisconsin families cannot afford to buy a new car or a house.

One reason the economy is sucking is that by any non-hyperpartisan’s definition, the federal government is not working. Anyone who thinks ObamaCare is just misunderstood and once you try it, you’ll like it should have their beliefs disproven by every new report about VA hospitals. The Washington Post’s Jennifer Rubin observes:

Whether it is the Department of Veterans Affairs, Medicaid, student loans or any other mismanaged and excessively expensive aspect of the liberal welfare state, the left’s answer to any reform proposal is invariably, “No, you’re trying to destroy it!” To try to reform these programs is, in the left’s eyes, an attempt to hurt the poor, sick, disadvantaged and powerless. The recipients in the current system may not get good care or students may be weighed down with huge debt and no useful degree, but liberals are content so long as more and more taxpayer money is poured into failing programs. Likewise, Medicare and Social Security can crowd out all other domestic programs and be on the road to bankruptcy, but reformers who attempt to make it sustainable for the long haul are accused of throwing Granny over the cliff. …

Examples of the problem abound. The VA is close to a European, socialized medicine program as you are going to see in the U.S., and it is killing people. Medicaid is rife with fraud and offers care much worse than non-Medicaid patients receive (in part because the rates don’t attract the best physicians). We’ve spent hundreds of billions on education and our kids do worse in math than do children in Poland and Vietnam. The libertarian would say: “Get rid of it all, and everything will be better!” The reform conservative says, “Let’s see if we can do these things better, or better yet, move more people off Medicaid, for example, and into good-paying jobs.” A good example of the latter mindset is Medicare Part D, a GOP reform that used market forces to keep costs down and make drugs accessible to the elderly. Liberals and libertarians fought it tooth and nail, but it works and people like it.

Liberals hate this sort of conservative talk and would rather spend more money for worse results. Why? We can be cynical and say they have a political dependence on civil servants and want those people to stay employed. Levin instead suggests that it is inherent in their vision of government: “The Left tends to champion public programs that consolidate the application of technical expertise: that try to take on social problems by managing large portions of society as if they were systems in need of better organization and direction. Again, it views government as organizing the interactions of individuals.”

Hand in hand with this go a few liberal habits of mind. First, it’s all about inputs. How many dollars, how many meetings, how many people served. When the dollars in a budget go down (or merely fail to rise), liberals holler that you are hurting the poor, without regard to whether the current programs are doing the job. The outputs — people out of poverty, people in paying jobs – aren’t even measured in many instances. (This isn’t just in domestic policy. Ask a State Department employee what he has “accomplished,” and he’ll reel off a list of memos, meetings and trips.) Second, it imagines that the smartest technocrats can figure it all out and micromanage a vast, diverse and complex country. You get Obamacare, which has federal bureaucrats telling you what an “acceptable” insurance policy is and what is, as the president put it, a “crap” plan that shouldn’t be sold.

The result of all this is a very big liberal welfare state that does a very bad job of addressing people’s problems. Oh, and it drives us into deeper and deeper debt. That is the bad news that contributes to the sense that government doesn’t work for anyone who really needs it. The good news is that the exhaustion of the liberal welfare state, a victim of its own flawed organizing principles, offers the opportunity for a vision of government that is better, more effective and more limited (at least at the federal level).

So what should be done about this? Fox News reports:

In a notable display of GOP unity in this often acrid primary season, Senate Minority Leader Mitch McConnell and House Majority Leader Eric Cantorstood alongside conservative all-star Sens. Mike Lee, R-Utah, and Tim Scott, R-S.C. for the release of “Room to Grow,” a 121-page policy manifesto aimed at attracting middle-class voters to the GOP.  The book written by the YG Network, a group of prominent conservatives with ties to Cantor, offers proposals on health care, taxes, and education. McConnell praised the work, telling the gathering the GOP needs to combat its elitist image and focus on “Americans whose daily concerns revolve around aging parents, long commutes, shrinking budgets, and obscenely high tuition bills” adding, “these hymns to entrepreneurialism are as a practical matter largely irrelevant.”

Peter Wehner of the Ethics and Public Policy Center outlines the problem …

In an era of rapid economic and demographic change, middle-class Americans express hope and optimism about their ability to climb the economic ladder. Yet two-thirds of Americans believe that it will be harder for them to achieve the American Dream than it was for their parents, and three-quarters believe that it will be harder still for their children and grandchildren to do the same. The chief fear of middle-class Americans is that just as it is getting harder for poor people to climb into the middle class, a stagnant economy is making it all too easy for those who have achieved middle class status to fall out of it.

Middle-class adults are far more inclined to believe that Democrats rather than Republicans favor their interests. But middle-class dissatisfaction with both liberals and conservatives runs deep, and this creates an opportunity for conservative reformers. Conservatives must understand the concerns of the middle class and speak to their aspirations and worries. They must offer a concrete conservative agenda that tackles the barriers to upward mobility, and that renews faith in free enterprise and our constitutional system.

… and National Affairs editor Yuval Levin outlines their solution:

Conservatives must offer an alternative to the fundamentally prescriptive, technocratic approach inherent in the logic of the liberal welfare state. While the Left seeks to impose order on the chaos and complexity of a free society through the use of centralized government programs, the Right seeks to protect, defend, and revitalize the space between individuals and the state. This is the space in which families, communities, civic and religious institutions, and private businesses are constantly finding new solutions to new challenges, and it is the space that is most threatened by the growth of government.

For conservatives, the role of government is to enable and sustain markets and other arenas of common action, ensuring competition, aiding the development of physical infrastructure and human capital, protecting consumers and citizens, and allowing the poor and vulnerable to participate along with everyone else. In practice, this means avoiding centralized programs that impose wholesale solutions from above in favor of those that enable a bottom-up, incremental, continuous learning process.

The conservative reform agenda aims to replace a failing liberal welfare state with a lean and responsive 21st century government worthy of a free, diverse, and innovative society.

National Review adds:

Room to Grow, an essay collection published by YG Network, a conservative group, is the latest evidence that conservatism may be experiencing an intellectual resurgence as well as a political one. The book collects and distills much of the fresh conservative thinking that journals like National Affairs — and, ahem, National Review — have been featuring on health care, financial reform, higher education, and other issues. The conservative authors of the book refuse to concede any of these areas to a Left that has often seen them as its exclusive territory, and refuse as well to adopt the role of defending a dysfunctional status quo from liberals who would make it worse. Instead they argue for conservative reforms: breaking the higher-education cartel, bringing real competition to health care, making anti-poverty programs work-oriented.

As in the late 1970s, ideas rooted in sound conservative principles and an accurate assessment of the American condition offer the opportunity to unify and elevate the Republican party. National Affairs, the American Enterprise Institute, and the YG Network co-hosted the book launch, which included supportive commentary by new tea-party stalwarts Senators Tim Scott (R., S.C.) and Mike Lee (R., Utah) and by established Republican leaders Eric Cantor and Mitch McConnell.

There is much work to be done. The good news for the country, and the bad news for liberalism, is that this work is now beginning.