RTCS

Views on the News

April 11, 2009

 

Views on the News*  

Recovery has already started despite the passing of the “stimulus” or “omnibus” bills, once again proving that these two liberal spending programs had nothing to do with this economic recovery.  Indicators are that the economy is beginning to recover: a significant easing of the credit crunch, improvement in consumer spending, a potential bottom in housing, and a less-grim jobs picture.  That doesn’t mean anyone is saying the recession is over yet, but the end may be closer than people think.  The stock market slowly recovering from its bottom is a leading indicator of economic recovery.  Unfortunately unemployment is a lagging indicator and recovery will cause employment gains after the economy has already begun to grow.  Economists estimate that at least three years would pass before full employment and growth returns.  The only way to avoid the inevitable inflation is to repeal the “stimulus” spending before it is spent since it was not designed to stimulate the economy and will only bury us in debt as it fulfills the liberal spending wish list.

 

Obama continues to impress with his speechmaking and presence, but realistically his first exposure as an American President received mixed world reviews.  The G-20 summit was a public relations success, but it was a substantive failure.  When the summit dealt with the current crisis, it failed to move beyond platitudes or to acknowledge the failure of most of its members to live up to their past pledges.  The gap between ambition and reality was apparent on each stage of Obama’s European odyssey.  For the first time in his political career, Barack Obama will be judged on the results of his programs, and not just the eloquence and intentions of his speechmaking, but his achievements were in reality sparse on this trip.  He received a mixed reception since the conference avoided discussion of why the economic downturn occurred in the first place:

·    President Bush flooded the world with cheap dollars, artificially bloating the banks' balance sheets, creating sham growth and causing a speculative bubble in the US real estate market.

·     The lack of transparency in the financial markets ensured that the poison could spread all around the world.

·    No other president has ever printed money and expanded the money supply with such abandon as Bush.

·    US consumption kept the global economy going for years, but the growth rates generated in the process were illusionary.

·    The US sold more and more billions in new government bonds in order to preserve the appearance of a prosperous nation.

The real problem is that the change of government in Washington has not brought a return to self-restraint and solidity.

 

President Obama’s commitment to misguided “stimulus” spending and his foreign leader charm offensive cost him respect among our allies.  As a result, no attention was given at the G-20 summit to the fact that the economic crisis is being fought with the same instrument that caused the crisis in the first place.  The only things which are currently running at full production in the US are the printing presses at the Treasury.  Obama left without securing any further commitment by individual countries to enact more stimulus spending of their own.  The only accomplishment that came out of the G20 summit was renaming the “Financial Stability Forum” to the “Financial Stability Board.”  The results of the NATO summit in Strasbourg were also disappointing since the only additional commitment of troops were for election security, not engaging “enemy combatants.”  His offer of unilateral disarmament in nuclear weapons and declining investment in missile defense were signs of “preemptive surrender” in a very dangerous world.  Obama’s charm has been an enormously effective instrument in American politics, but once he takes it overseas, it becomes increasingly limited in its effectiveness or of no value whatsoever.

 

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Obama is our “Blame America, First” president who begins each foreign policy statement with an apology for American leadership, as if that it’s something bad!  Apparently Obama believes Americans should feel more guilty than grateful, more embarrassed than proud, over our disproportionate power and prosperity.  The Obama administration relentlessly is pursuing the doctrine of liberal isolationism, isolating America from its allies while shrinking American influence abroad.  He criticized American attitudes by apologizing for imagined offenses such as arrogance and being dismissive and derisive at times.  Obama’s speech on nuclear disarmament displays dangerous idealism that runs an enormous risk, where the administration’s substitutes words for actions and fantasies for achievements.  The West has talked with North Korea for over 15 years and they just keep building nuclear weapons and missiles.  We have been talking with the Iranians for a decade and they continue to build nuclear capability and missiles.  At the same time Defense Secretary Robert Gates announced deep budget cuts, axing six major defense weapons systems, including missile programs, helicopters, fighter jets and a communications satellite.  What is most disturbing is the reluctance to release the Quadrennial Defense Review that articulates the underlying assumptions that these defense cuts are based.  President Obama’s bumbling response to the Somali pirates attacked on a US flagged vessel, first since 1804, is an unpleasant reminder of President Carter’s inept response to Iran’s holding the embassy staff hostage in 1979.  The question will be how to judge the prisoners under the principle “extra territorium jus dicenti impune non paretur” (the judgment of one who is exceeding his territorial jurisdiction may be disobeyed with impunity) and treat them as terrorists on the high seas to be hanged?  The President’s foreign policy approach is hopelessly naïve, dangerously weak, and emboldens our enemies to test our resolve and commitment.

 

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Polls show that the public is both nervous and angry as political leaders throw together massive financial bailouts.  Zogby polls show Obama’s approval and disapproval numbers even at 50% - a dramatic drop in popularity in just his first 100 days!  After promising to be the most bipartisan president Pew Research found the partisan gap between Republican and Democratic approval ratings for Obama stands at 61 points, making him the most polarizing president in recent times.  We instinctively know that high levels of public debt are dangerous for our future whether we voted for Obama or McCain in November.  Concerned citizens want a sustainable recovery we can believe in not an inflationary quick-fix.  We cannot have confidence in economic stimulus and bailouts that look, sound and smell like a giant Ponzi scheme.  We have to begin by stipulating that government and many companies and individuals have been living beyond their means for quite some time.  Undermine personal responsibility and initiative, expect a "free lunch" or provide them, spend money you don't have on things you can't afford and you have the universal formula for disaster.  Pursuing policies that got us into this mess might give us a short lived reprieve but will only delay the inevitable.  Policies and actions consistent with living within our means and being held accountable for good and bad decisions in every sector of the economy are necessary for a sound recovery.  We don't like it and we can't afford it.  Obama has been a unifier of sorts… he has united Democrats and united Republicans against each other.

 

People are hopeful the Obama administration will bring competence and fairness back into our political and economic culture, but that hope is starting to erode.  President Obama is tentative about both closing down our foreign wars and securing our borders though he is willing to aggressively increase government spending.   As President he advocates government deficit spending coupled with tax and fee increases to create jobs and secure the losses of defaulting global corporations.  These policies will kill the productivity necessary for recovery.  Business needs to provide goods and services that the market wants.  Consumers need to keep their spending limited to what they can afford.  The one hard truth Barack Obama won’t utter is that all Americans will have to pay higher taxes before long.  Obama and his advisers expect to limit such debt via broader tax increases, presumably in a second term.  Once this recession is past, taxes will go up in the years ahead no matter who is in power.  Saying the truth publicly, that taxes will need to rise once the recession is past, will brand Democrats as a tax-and-spend socialist.  Voters need to direct their political representatives to live within the revenues provided, create tax policy that incentivizes productivity and provide a safe environment for the rest of us to go about our business.

 

If it looks like nationalization, smells like nationalization, and sounds like nationalization, it is the first step towards socialism and no amount of spin can hide this government expansion.  TARP is being used as an endlessly flexible slush fund that has given the federal government warrant to intervene in the private sector however it pleases.  Obama claims “The US government has no interest in running GM,” but his actions say just the opposite, as he fires the CEO and directors, sets product strategy, guarantees product warrantees and promises tax credits to improve product sales.  The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future.  Treasury Secretary Tim Geithner has indeed declined to accept $340 million in payments from banks in Louisiana, New York, Indiana and California.  The administration is tacitly admitting that it wants to control those companies as well as others that will try to pay back the taxpayers' money they took in the Troubled Asset Relief Program.  By refusing repayment, the government can keep the leverage it bought with the bailouts.  Companies that still "owe" would not be in position to reject the administration as a "partner."  The White House wants to tell them what to do: Control; Direct; Command.  If the companies are forced to keep TARP cash, which was often forced on them in the first place, the Obama team can work its will on the financial system to unprecedented degree.

 

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In exchange for government assistance to General Motors, President Obama demanded the resignation of GM Chairman Rick Wagoner.  Now, his Treasury Secretary is claiming the prerogative to oust bank executives.  The rationale is that receipt of taxpayer bailout money should be conditioned on a show of “accountability” on someone’s part.  The problem is that in President Obama’s world, accountability is only for the private sector.  Governmental (or quasi-governmental) entities and those who work for them (and therefore, by extension, directly for the taxpayers) seem exempt from the standards imposed on those in private enterprise.  Now even as President Obama forces the removal of GM’s chairman for effectively bankrupting his company, he’s proposing to bankrupt the country on an unprecedented scale.  But the hypocrisy doesn’t stop there.  The President vociferously denounced the $165 million in bonuses distributed by AIG, a recipient of government bailout money.  So far, however, he’s been suspiciously silent about the news that quasi-governmental mortgage giants Freddie Mac and Fannie Mae are slated to hand out $210 million in bonuses this year, notwithstanding their combined loss of over $100 billion last year, and Fannie’s request for $15 billion of taxpayer bailout money.  If President Obama truly wants to enforce accountability, then perhaps he should demand the resignation of Senator Chris Dodd and Congressman Barney Frank for their mismanagement of Fannie Mae and Freddie Mac, or Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi for mismanaging the federal budget and out of control spending?

 

President Obama continues to dig himself into an even deeper hole in his attempt to deliver on key campaign promises.  Just in February and March alone (two months solely on his watch) he has presided over a record breaking nearly 2 million additional unemployed persons than when he took office.  The national unemployment rate now surging well past 8.5% (double that of the majority of Bush’s two terms).  If President Obama inherited the greatest recession since the Great Depression, his policies, lack of action, and wrong-headed decisions have now surged the nation past it.  Jobs are not created in a vacuum.  If there is no benefit to the corporation hiring them, then they should not be given a job, plain and simple.  President Obama has chosen instead to spend money we haven't yet printed.  He also insists on creating jobs that serve no economic purpose in "greening" the most environmentally conscious nation on earth.  On top of that he stifles the risk-takers from creating new products, developing growth, or starting businesses.  The money he's photocopying in the basement of the White House, when it is printed, will be nearly worthless because of the lack of securities behind it.

 

Newt Gingrich is right that many conservatives are unhappy with the Republican party for its deviation from its conservative roots, but splintering off to form a third party is a guarantee of minority status for years to come.  Voting for Ross Perot as a Republican alternative was a wasted vote that opened the door for eight years of President Carter’s liberal damage to our capitalist economy and our national defense.  Most conservatives like me feel that the last President who represented my ideals was Ronald Reagan and the Republican Party has been abandoning his views ever since.  The Tea Party movement is opposed to rising taxes, more government control over private enterprise, and less individual liberty, has caught fire and spread from one end of the country to the other.  These Tea Parties are planned for April 15th focused on the following theme: “Repeal the Pork, Cut Taxes and Spending.”  There are more than 500 Tea Parties confirmed for that day, and it is expected that over the next week and a half, the number of tea parties will continue to grow, each with crowds of 5,000 to 10,000 expected in multiple cities.”  This silent majority protest movement has captured the imagination of the conservative grassroots and has taken hold.  So far the reaction from the national Mainstream Media has been to downplay or ignore the Tea Party rallies.  Until the Republican party can articulate a platform which resonates with the conservative core, we will continue to see disjointed GOP members canceling each other out.  Do not be surprised if in 2012 if someone runs for president who does not fit the conventional Republican template - an Independent libertarian conservative who runs against both major parties claiming that “the mess we are in has been created and compounded by both the Republican and Democrat parties — and until we dismantle both we can never get this country back going in the right direction.”

 

* There is so much published each week that unless you go out of your way to find it, you will miss important breaking events.   I package the best of this information into my “Views on the News” each Saturday morning for your reading pleasure and to fill in factual discrepancies. 

 

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

 

Week’s Best Articles:

 

David Coughlin

Hawthorne, NY