Tuesday, September 7, 2010
The Problem with the Economy is Obama
By Alan Caruba
On Tuesday evening during a CNN news hour anchored by Wolf Blitzer, he and his guest, David Gergen, the channel’s senior political analyst and a journalist with experience inside the White House as well as reporting on it, were discussing the many polls that show that the Democrat Party will likely lose control of the House and possibly even the Senate.
Gergen opined that the economy that President Obama inherited from George W. Bush had not improved in the twenty months since he took office and, in fact, had worsened despite throwing billions at it in the form of so-called stimulus bills, shovel-ready projects, green jobs, and all the other promises made.
What was the problem they wondered and I thought, the problem is President Barack Hussein Obama.
No one in the corporate, industrial, and business world intends to do much more than acquire their faltering competitors so long as Barack Obama is setting economic policy. The rest of the nation, particularly small business owners, are not doing anything except waiting for the midterm elections in November and thereafter for the national election in 2012.
Few trust the President and even fewer trust his economic advisors, the most inept and incompetent bunch of academics to gather in the Oval Office since the days of Franklin Delano Roosevelt. Over the course of a decade in the 1930s, FDR’s advisors tried everything except to leave the business community alone long enough to let market forces take hold.
The result was the Great Depression during which the owner of a drycleaner service was threatened with jail time for lowering his cost to customers in order to be competitive!
The oldest lesson in governance is that the government, no matter who’s in charge, has no idea how to run a business and only rarely relaxes the iron grip of taxation to permit business activity to expand. We particularly remember those that did introduce sensible tax policies such as John F. Kennedy and Ronald Reagan.
A very big part of the problem is that U.S. corporations are taxed at a higher rate than virtually all other nations.
Instead of a “Fair Tax”, a flat rate on the consumption of goods and services, as opposed to a tax on income, individuals and businesses find themselves trapped in a rat’s maze of tax rules and loopholes that baffles even the Internal Revenue Service.
President Obama came into office with the expectation that he would address the single most important issue of the day, the economy.
His predecessor had tried to introduce some reasonable changes to the Social Security system, but they were rejected. When the housing market imploded Bush was blamed, but Bush had earlier attempted to correct the abuses of Fannie Mae and Freddie Mac and had been rebuffed by Congress.
As of 2006 political power in Congress had been transferred to the Democrats. Thus, for the past four years, the economy has been their responsibility even before Obama was elected.
At the heart of today’s economic problems are the Democrat “social justice” programs dating back to the days of FDR. They are unsustainable because the demographics of American society have changed as life spans have been extended.
Social programs such as those supposedly underwritten by the mortgage practices of Fannie Mae and Freddie Mac actually reflect a liberal utopia, not real world dynamics.
They were intended to make the purchase of homes available to people who clearly could not afford them. Banks and mortgage loan companies were pressured by the government to make “sub-prime” loans. They came to be called “Ninja” loans; no income, no job, and no assets.
As the economy cratered, one of the first acts of Congress was to seize control of Fannie Mae and Freddie Mac as mortgage loan companies failed and as banks and investment firms that had purchased their bundled mortgages as securities began to totter. One, Lehman Brothers, was so far in the well it was immediately allowed to fail while billions in TARP money was allocated to others to avoid a complete systemic failure.
While this was playing out Obama was packing the White House with a succession of “czars”, most of whom were beyond the vetting process of Congress and almost all of whom had ties to hardcore socialist groups or advocated bizarre “science” theories involving a global warming that was not happening.
Obama’s early choices for his cabinet became an embarrassing succession of tax cheats and others with ethical issues who had to withdraw from consideration. The final selection for the Secretary of the Treasury, Timothy Geithner, claimed his own tax errors were the result of a computer program that anyone can purchase and use without similar problems.
None of this went unnoticed in the business and financial communities, nor was it lost on anyone that Obama was ignoring the faltering economy while pulling out all the stops to get his Medicare “reform” package passed. His administration’s tentacles reached out to grasp one sixth of the nation’s economy, healthcare.
At one point, a million people came to the steps of the Capitol to protest. Instead of introducing true reforms, Obamacare added more people to the insolvent program’s rolls while cutting billions from it. It was also, in one important respect, unconstitutional.
At the very heart of the nation’s economic problems are the President’s judgment, his socialist, redistributive ideology, and his highly partisan approach to politics. It was lost on no one that his so-called stimulus package was a huge giveaway of public funds to prop up civil service unions and others.
As distrust for Obama grew, so did the lines at the unemployment offices around the nation.
The joke became, “Don’t tell him what number comes after a trillion.”
All told, the nation is facing some $13 trillion in debt stretching beyond our children to their children and to the following generation. It is unsustainable.
People stopped spending money on any purchase they could defer, particularly major ones like the purchase of a home or even a car. Corporations in their own way did the same thing.
The prospect of a huge tax increase when the current Bush tax cuts expire at the end of the year will further drain consumer buying power, the key to recovery. It freezes all decisions regarding the future.
The advent of a Republican-controlled Congress and of many States that will vote Republican governors into office will determine whether the economy will improve. A bloated federal government must be reduced in size to save the nation.
Everyone knows these problems have been exacerbated by Barack Obama and everyone is waiting for him to exit the White House.
© Alan Caruba, 2010