Change...Yes Economic Revival... Not So Much

Change…Yes Economic Revival…Not So Much
Our President and the huge Democratic majority in Congress were elected into office under the well-publicized banner of change. It was promised that one of the first acts of the new Congress and President Obama would be to pass an economic stimulus bill that would create jobs and jump-start a deeply troubled economy.
To be fair President Obama inherited a mess of an economy and an ongoing War on Terror among other challenges. The former President Bush and his cabinet should have seen the current economic crisis coming and done something about it two or three years ago. Yes, it is true that at some congressional hearings the former Federal Reserve chairman Alan Greenspan warned the committee that Freddie Mac and Fannie Mae (home mortgage guarantors) were on the brink of collapse but no one appeared to listen. At this point the President should have made a big public statement about the problem. But he did not and we are now in a financial pickle partly because the crisis stretched far beyond Fannie Mae and Freddie Mac and extended to major financial institutions that were also on the verge of collapse.
Success for President Obama will be defined by his ability to lead the country out of a troublesome recession. Unfortunately the economy could get even get more ugly and President Obama’s high popularity could disappear into the mists of discouragement and impatience.
For President Obama success will be defined by a dramatic turnaround of the economy. To the credit of the former president, while the "ball" was still in his court efforts were made to turn the economy around. A hastily formed 350 billion dollar "bailout" of financial institutions was formulated, passed by the Democratic majority in Congress and signed by the former President to help alleviate the crisis as the Stock Market crumbled.
From your perspective as a reader and as a taxpayer how is the economy doing? Exactly how has that bailout worked for you? Have those billions of dollars improved the state of the economy and your life? Do you actually believe that Congress would spend your tax dollars well? Did you know that confidence in Congress is at a historic low? The promise made with the bailout was that eventually those dollars would trickle down into more available credit for everything from home mortgages to the purchase of cars. Do you see any signs of that happening?
Billions of your future tax dollars have been poured into financial institutions with very few strings attached and little or no accountability for executives who were in charge. Doesn’t it bother you that those who could have made a difference and didn’t are getting off with little or no consequence both in Congress and in many financial institutions? Doesn’t it bother you that there are sitting members of Congress who have been charged with serious legal and ethical misconduct and yet nothing has been done to hold them accountable? (Charley Rangle, for one) Our new Treasury secretary failed to pay over $40,000 in taxes. His excuse was pretty lame and yet he was approved to take his post.
Why do we not have higher standards for leadership in this great country? If standards are low what are we likely to get as a result? Low or subpar performance, right? The evidence is clearly seen in the work of Congress. Are we so desperate for qualified leadership that we have to set the bar of ethical conduct at such a low level? Unfortunately America, that seems to be the case.
As I look at the new presidential administration and the President’s extensive promises and plans for change economic success is not going to come easily or quickly. And isn’t it interesting, perhaps disappointing is a better word to hear the President and ranking members of Congress "water down" or dilute those campaign promises?
What major campaign promise of now President Obama sticks out for you? For me, it was the pledge to end "pork" or special funding in the Federal Budget. I understand now how the President plans to honor that promise. All the "pork" is in the "stimulus" bill.
Congress has just passed an economic recovery bill in excess of 825 billion dollars. Congress doesn’t seem to understand that this is not Monoply money that we are talking about. People like Jack Welch, the former CEO of the once extremely successful General Electric Corporation believe that the so-called stimulus package is not geared for substantial job creation but for funding special social projects that have little to do with stimulating the economy.
Analysts have estimated that only 21% of the "stimulus" bill can even be remotely connected to the creation of new jobs or to the highly propagandized plans to rebuild the country’s infrastructure. Instead we have billions of your dollars designated for buying new cars for Congress, for modernizing higher education, for new science facilities and equipment, for bailing out state governments, for anticrime initiatives and for funding "global warming" research. Are you aware that the latest research done over the last 3 years clearly demonstrates that the earth is not warming but is in fact getting marginally colder? Why are we spending millions of dollars for a problem that doesn't exist except in the minds of some misguided people and a former Vice President who are unwilling to look at recent research. Why? Because it doesn’t fit their agenda.
You can call this 825 billion bill many things but it is anything but a stimulus package. The reason why this bill was fast-tracked through Congress is that no one wanted you, the taxpayer, to have the time to take a good look at the spending proposals. If politicians were honest they would call it what it is; it is a massive spending bill for favorite social programs. Less than half of the money can even be remotely connected to economic stimulus. Don’t take my word for it. Go online and download a copy for yourself. I did and it is a staggering read. Again it is not a "stimulus" package, it is a spending program that may lead us to an economic apocalypse.
It was Thomas Jefferson who said it best. "A government that is big enough to give you everything you want, is big enough to take away everything that you have" to support what Congress wants to spend.
Do we not ever learn from the mistakes of history? No country has ever spent their way out of a deep recession. In 1990 Japan was in the midst of recession and the government passed a series of "stimulus" bills over eight years to deal with their crisis. They built what was at that time the largest national debt in the industrialized world. (America has since taken over that honor) What was the result? Their economy remained stuck in the dark mire of debt, joblessness and discouragement. That country went from one of the highest per capita income levels to the tenth.
Why can we not learn from their experience? Massive spending programs do not work. It is apparent that neither the President nor a majority in Congress is willing to take a serious look at past history. Here it is in a nutshell. What didn’t work in Japan in the 90’s or during the American Great Depression in the 30’s will not work today. History screams that simply pouring money into a deeply troubled economy is a bad idea and has been a colossal failure.
Evidently our financial crisis is so different now that our elected officials are convinced that it will work this time. But is it? Believe me, plans are in place to increase taxes to pay for all this spending. Personal and business taxes will increase, substantially for some. Has there ever been a time where a government has successfully spent and taxed their way out of economic crisis? Imposing higher taxes in the 30’s was a terrible idea. Businesses closed left and right and unemployment shot through the roof. Recently it was announced that Circuit City is closing its doors. Some other major companies are "laying off" people by the thousands. (50 thousand in one day) Increasing the tax on these business is certainly going to encourage them to employ more people, right? Absolutely not!! But a huge personal and business tax increase is a major part of future plans. Does that make sense?
What was the problem that led up to the Great Depression? And is it similar to what is going on now? Why did the financial system fall apart in the 30’s? Was it because the systemic causes of the economic collapse were not adequately identified and addressed? We emerged from the depression not because of anything the government did during the "New Deal" but because our country was drawn into worldwide conflict. Historians today say the New Deal was a raw deal for the economy.
Are the plans of our new president and an emboldened Congress to stimulate the economy on the right track? Or will recent history simply be repeated? The President’s plans for success hinge on the bet that by pouring trillions of future taxpayer dollars into the economy, by continuing to "bail out" irresponsible lenders and executives and businesses (the automobile industry) the economy will turn around. Recent history doesn’t support that bet at all.
Congress has never had a good record for spending tax dollars well. They spend money on well-intended social programs that turn out to be a complete failure. The welfare debacle of the 70’s and 80’s is a classic example. Socialism doesn’t work. The history of our country clearly demonstrates that the free enterprise system does work, that encouraging businesses to grow, to add new employees, to develop and market new products stimulates the economy.
But here we go again as Congress gears up with another effort to spend and then tax America’s way out of financial crisis. Is this the kind of change that you want? Again, has it ever worked? It is my bet that unless the systemic causes of our current economic crisis are not addressed we will be pouring trillions of dollars down the proverbial "rat hole." Don’t you agree? From my perspective there are three root causes for our economic crisis; they are incompetence in Congress, lack of oversight in financial circles and greed.
We appear to have the needed regulations govern financial institutions but congressional oversight is sadly lacking as we have seen. Congressional leaders have shown themselves to be inept at best in providing oversight. From what I have seen Congress is incompetent in the handling taxpayer money. They should be the last people to provide oversight, but for now that is their job and they have done it poorly.
Another root cause is greed and self-interest both in Congress and in our financial institutions where executives are seemingly rewarded millions of dollars for leading their companies into financial chaos. Now what on earth is that all about?
Just recently it was revealed on the news that Barney Frank, one of the guys who controls the purse strings in Congress, made sure that a failing bank in his home state received 12 million dollars as part of the bailout. Isn’t this part of another problem in Congress, elected officials who make sure that pet projects are funded? Frank’s rationale was fascinating. He essentially said that since the government put the bank in the tank, the government should get them out.
Again didn’t President Obama say that he would get rid of "pork" spending? Isn’t the 825 billion dollar spending bill mostly about spending money on social projects and not about turning the economy around? At this rate success will elude President Obama for a long time. I predict that within just a year or two America will turn on the President and Congress like a pack of rabid and very hungry dogs. And it won’t be pretty. The kind of change that President Obama and Congress are now implementing does not have much chance for success. And you know what; I sincerely hope that I am wrong.
Lin Goodyear