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Views on the News

January 31, 2009

 

Views on the News:          

Why is this county in crisis? Free Market Capitalism has a cure: It is called a recession. Why do we think the people who caused these problems are able to fix them any better?  The federal government has failed consistently in every effort to run Government Sponsored Enterprises (GSEs).  Democrats have an eighty year track record of making all the wrong moves concerning federal ventures into private enterprise. How many GSEs do they have to bankrupt before voters get the message that the fed is no good at running private enterprises?

All of them are GSEs, federal attempts to manage enterprises which would be better managed by private sector people who have a history of running enterprises successfully. And all of them are BANKRUPT!  Yet instead of stopping the digging, the same Democrats that bankrupted them are now blasting the hole deeper at a fever pace.  Forty of fifty state budgets are also bankrupt and begging for federal bailout money, from a federal government, which happens to be bankrupt itself.  Have we become so fragile that we can't handle any recession?  The 11 recessions since World War II are part of the "creative destruction" that ultimately drives our economy, yet today politicians act as if they can insulate us from pain with bailouts and "stimulus packages."  More than 100 prominent economists signed a petition against the stimulus package, and more than 200 signed a petition against the financial bailout.  It is time to let the imprudent fail and the prudent pick up the bargains.  Bankruptcy can be a good thing: Kmart declared bankruptcy in 2002, but it didn't disappear.  Filing for bankruptcy allowed the company to reorganize itself and reemerge stronger.  Governments can't possibly know everything that's going on in an economy, and so while government intervention may delay some economic pain, it cannot stop it.

 

The “American Recovery and Reinvestment Plan” is really a Democrat pork spending (“porkulus”) plan whose goal is to grow government since it is neither quick, nor stimulates the economy, nor creates any long term jobs.  The proposed Obama-Pelosi “economic stimulus” would end the era of merely big government and replace it with leviathan government.  $136 billion of the bill is for unproven ideas and will create 32 new federal programs, that once established are likely to continue indefinitely.  Packaging the spending as a stimulus for economic growth sounds good, but can not hide the fact that most of the content are projects that couldn’t get funded under President Bush.  Economists don’t expect to see any significant increase in jobs or in the Gross Domestic Product until at least next year.  At best the stimulus would only slow down the rate of economic deterioration this year.  Here are some of the individual programs with their projected outlays:

·         $87 billion of Medicaid funds, to aid states.

Also masquerading under Obama's economic renewal act is $154 billion for health care -- $90 billion to bolster state Medicaid funds, $39 billion in health insurance subsidies for the officially unemployed, $20 billion for health-information technology modernization, and $4 billion for preventive care.  Congressional Democrats propose to increase SCHIP by $32 to $39 billion over five years, according to estimates by the CBO, almost tripling the program by 2013.  The Democrats' other under-the-radar expansion of government power is in something called "Comparative Effectiveness," which looks at the effect of different options on treating particular medical conditions.  This sounds harmless enough, as practitioners should be aware of how effective different treatments are, but it could also be used as a cost-cutting and therefore treatment limiting approach, similar to the approach many European countries use.  As for $275 billion in proposed tax relief, how do $140 billion in personal tax cuts for two years ($500 per worker and $1,000 per couple) differ from the Bush Administration's ineffective 2008 emergency relief program?  The stimulus would pour money into strapped state and local governments, which would spend it almost immediately on new infrastructure projects and entitlement programs.  The bill passed by the House dedicates only about 5% of the $819 billion measure to highway, mass transit, and rail projects.  Also in this Democrat package is a $4.2 billion pot for "neighborhood stabilization activities" to include "nonprofit entities or consortia of nonprofit entities," which translates into groups such as ACORN, who perpetrated voter registration fraud numerous times in the last several elections and played a key role in the irresponsible schemes that caused the financial meltdown that American taxpayers are now paying dearly for.  There is no consensus among economists on the Democrat “stimulus” package, since many oppose it.  The stock market is a good early indicator about whether the financial markets believe that the stimulus is going to turn around the economy, since they measure the market’s belief, not the reality.  The reason that some call this the “Obama Recession” and the “Obama Market,” even though it began under Bush, is that it is a reflection of the impact of his expected economic impact.  The only ideas being put forward by the Democrats are the very ideas that created the crisis in the first place – more government intrusion into the economy, more bailouts of failed financial and industrial institutions, more command-and-control policies from Washington, more picking of winners and losers among businesses and, of course, more spending and more debt.  All of this is doomed to failure, and the Democrats know it.  To mask their failure, they have only four options for the Democrats: lowering the expectations they raised so high during elections in 2006 and 2008; blaming Republicans for everything for the next four years; seducing and compromising Republicans to join them in their plans; attempting to criminalize past policy decisions by Republicans through an endless series of partisan investigations and demonizations.  We have already seen the Democrats tip their hands on the first two options.  As they get more desperate and the clock ticks closer to the next mid-term election cycle in 2010, I predict we will see them work overtime on the last two. Now Obama is desperate to declare that his Spending Program is a “bi-partisan” solution which he defines as including some Republican names who voted for it for whatever reason.  This administration and Congress are in a position to do what FDR did during the Great Depression - use a crisis of the times to create new institutions that will last for generations.

 

Republicans need to go public with their own Economic Stimulus Plan that would actually work to stimulate the economy, create long term jobs, and fixes the underlying problems.  All the Republicans have to do to ensure victory over the next four years is to refuse to vote for more bailouts, refuse to vote for more debt and more wealth redistribution, refuse to vote for more government intrusion into the economy.  The Republican Study Committee, led by Congressmen Scott Garrett and Jim Jordan, has introduced an alternative to the Democrat American Recovery and Reinvestment Plan, the Economic Recovery Act based upon three imperatives for growth: providing tax relief for American families, reducing economic burdens on American businesses, and relieving future generations of a crushing debt burden.

·         This sensible, practical solution will immediately give American taxpayers greater freedom to save and spend by providing a 5% across-the-board income tax cut.

·         The Economic Recovery Act increases the child tax credit and removes the penalties for withdrawing from 401(k) and IRA funds.

·         The corporate tax rate would be cut from 35% to 25%, putting the U.S. on par with the European Union, making investment in American business attractive once more.

·         The proposal allows businesses to immediately deduct the costs of all assets and making the capital gains tax structure more investment-friendly.

·         The bill includes a 1% across-the-board spending cut on all non-defense discretionary spending.

Even Rush Limbaugh has proposed and published his own better bipartisan stimulus package that also actually stimulates the economy, creates jobs, and fixes the underlying problems.  Republicans now must go on the offensive with their stimulus alternative showing that it actually stimulates the economy, creates new long term jobs, and fixes underlying problems:

·         Champion policies that are true to America’s traditional principles. Don’t fixate on what this new president does or doesn’t represent. That’s his worry.

·         Let Obama be the one whose knee-jerk response comes to be perceived as perpetually in the negative. Cheerfully let him inherit the role of grumpy spokesman for the new reactionaries.

·         Make America’s conservative and constitutional values the subject of every sentence in primary proposals you put before the nation. Make those proposals, not Obama’s, the focal point of national debate.

·         Think through those options carefully and articulate them so Americans can visualize how they affect them and their loved ones in their daily lives. Their views, not Obama’s, are the ones that matter.

·         Foreswear trying to curry favor with Obama and his party in Congress by being suckered into the tar pit of phony bipartisanship in an effort to appear reasonable and loveable. Better to stand as the sole proprietors of ideas that make sense and actually work. Let Obama and his crowd go their own way, prancing into failure unabetted.

We stand at a crossroads, not just for our economy, but for the type of nation we want to be. A political economy may be attractive to Democrats in Congress, but the American people still value a system that rewards hard work and offers every American the opportunity for prosperity.  If Republicans can develop the intestinal fortitude to stand tough and not compromise, Republicans will likely win back control of the Congress in two years.

                                                                                         

Obama’s foreign policies are a reflex of guilt and shame about our society and history, eager to apologize for our presumed sins, willing to blame ourselves for the world’s ills and take seriously the self-interested slanders of states whose record of dysfunction and crime outstrips ours by miles.  Only we Westerners, so sensitive and guilty, are vulnerable to that sort of emotional blackmail.  This is an idea that criticizing your own culture and values is a sign of intellectual sophistication.  This “self-abasement” has now hardened into banal clichés repeated in popular culture, school curricula, and the received wisdom of badly educated pundits.  Both President Obama and Secretary of State Clinton are on record as believing that the key to world peace and the end of Islamic jihad is to buy-off the enemy with welfare benefits, funded by American taxpayers.  Given the current state of the economy and the Federal government's massive deficits, this may be unrealistic.  This approach is based on social justice, the liberal-progressive hypothesis that institutions supporting private property rights foster unfair accumulation of wealth in the hands of greedy capitalists, leading to social discontent.  Redistributing wealth, in liberal-progressive doctrine, removes incentives to aggression, crime, and war.  America's other important foreign-policy goal, Obama wrote was reducing global poverty: the root cause, in his view, of terrorism and political extremism around the world.  America would become the world's self-effacing social worker.  Hillary Clinton promised a new start, focusing on international cooperation and multilateralism, exhausting every avenue of diplomacy before resorting to military action, "avoiding false choices driven by ideology," and devoting our resources to problems like global warming and third-world poverty.  The World Economic Forum (WEF) released their “The Global Agenda 2009” that endorsed global governance and leadership which has a receptive audience in this administration.  Apparently having learned nothing from the dismal showing of liberal-progressive foreign policy in the 19th and 20th centuries, the President and his Secretary of State propose to run the same banner up the flagpole once again.

 

The Mainstream Media would like you to believe that Obama is off to a fantasic start and all his decisions are well received, but his image has already begun to tarnish.  The new President’s approval rating ranges from a high of 79% (Pew and ABC news/Washington Post) to a low of 60% (CBS News/New York Times).  The Congress approval rating remains at a low 21% with 70% disapproving of the way Congress is operating.  Meanwhile only about 22% of Americans think the U.S. is on the right track.  It won’t be long before Americans notice that their beloved President is just as bad as the Congress and his approval rating will rapidly sink to reflect that new perception.  Obama is desperate to declare that his Spending Program is a “bi-partisan” solution which he defines as including some Republican names who voted for it for whatever reason.  Unfortunately for Obama that the only bipartisanship displayed by the House was a bipartisan rejection of the package with all the Republicans joined by 11 Democrats voting No!  The stimulus bill, if not heroically vetoed, will be the beginning of the eventual collapse of the Obama Administration.

 

If you are sick and tired of government and politics as usual, read my web site with its individual issue analysis and recommendations at: http://www.returntocommonsensesite.com Remember this site is updated every Saturday. Individual issue updates this week include:

 

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David Coughlin

Hawthorne, NY