Posted by
Jackpine Savage on Friday, January 09, 2009 4:54:16 PM
Yesterday, President-elect Barack Obama revealed his new "stimulus plan", which he has dubbed the "American Recovery and Reinvestment Plan".
I call it the New Raw Deal.
In this post I'm going to dissect some of the highlights of Obama's speech.
"Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation.
This is one of those years."
I love this, "A troubled past"? So, according to Obama, nearly a decade of unequaled economic growth is now "A troubled past"??
I guess, if your goal is turning America into a socialist nirvana, I can understand the triumph of capitalism "a Trouble Past", but all the people who became millionaires during this "Troubled Past" by the sweat of their brow, may feel a bit differently.
"We start 2009 in the midst of a crisis unlike any we have seen in our lifetime – a crisis that has only deepened over the last few weeks. Nearly two million jobs have now been lost, and on Friday we are likely to learn that we lost more jobs last year than at any time since World War II."
While they'll be arguing for decades over the cause of the current crisis, all the economists I've read, say that it was poor government regulation, coupled with liberal meddling in the market that brought this mess on.
One thing is clearly evident, Obama is still in campaign mode. Much like the first 4 years of the clinton administration, it appears Obama will be in non-stop campaign mode for the next four years. After he won his second term, clinton quit campaigning and started chasing fat interns.(But that's another story)
"I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years."
Talk about Deja-Vu! If you read transcripts of FDR's early economic speeches, you will see the very same warnings, If we don't do something now, we'll never recover.
Of course, if you read "The Forgotten Man" by Amity Schlaes, or just about anything by Thomas Sowell, among other economists, you learn that the "Drastic Measures" FDR implemented did nothing to fix the recession, and instead turned a Recession into the Great Depression. Recessions through our history, usually have an average lifespan of 18 months. The Depression lingered a Decade!
"This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC."
In some ways, this is correct. We didn't get here because of normal business practices, we got here through a combination of really bad ideas backed up by a liberal government overseen by Clinton, then Bush, and Wall street trying to take the lemons handed them by DC, and trying to make lemonade.
The Community Reinvestment Act, begun by Jimmy Carter, and Strengthened by Bill Clinton, forced banks to provide loans to buyers who couldn't repay those loans. Sub-Prime mortgages became a huge Ponzi scheme, that needed constant infusions of new blood, from increasingly bad risk borrowers, because the only way to profit was to spread the risks around. They packaged bad risk loans with some that weren't quite so bad, then sold them as "Securities". As long as everyone paid their mortgage payments, everyone profited. But when democrats refused to do anything about skyrocketing energy prices, the bottom fell out of the market, when the sub prime mortgage customers had to decide between paying their bills and buying food.
"Now, the very fact that this crisis is largely of our own making means that it is not beyond our ability to solve. Our problems are rooted in past mistakes, not our capacity for future greatness."
I would actually agree with this, if he actually meant "We democrats screwed up", but we know that the "We" simply means "Republicans". And his line about Greatness, means the Greatness of socialism.
"That is why I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation and long-term growth."
This translates to, "We're going to throw money around and hope something works."
"There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short-term."
Talk about Understatement!
This package costs more than the entire Iraq war, which dems ghave screamed is too expensive. And by "In the short term" he means "Our grandchildren's grandchildren will be paying for it.
"Only government can break the vicious cycles that are crippling our economy – where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."
This gets to the Heart of his whole plan.
Only Government can truly give you everything you want, and give you a security blanket, so you don't have to do anything to improve your own life.
Trust us, we'll take care of you.
"That work begins with this plan – a plan I am confident will save or create at least three million jobs over the next few years."
Over a Trillion dollars to create Three Million Jobs? That averages out to 4.6 million dollars per job created. This is Responsible fiscal policy???
If you want to really stimulate the economy, why not just take that 1.4 trillion and disburse it to the approximately 200 million adults citizens in the country? That would Stimulate the economy. It would also eliminate the unemployment problem, save the auto industry, and the baking industy in one fell swoop. Of course that would make too much sense, so it could never happen.
I could go on, but the above makes my point.
This is nothing new, this is basically the same stuff that FDR tried out, which failed miserably. A nation cannot tax and spend it's way into prosperity.
If you want to stimulate the economy and create jobs, simply repeal the Capital Gains Tax, remove stupid government regulations like "Mark to Market, and Sarbanes-Oxley", then get the hell out of the way, and let the market fix itself.
There are Overwhelming amounts of evidence that FDR's New Deal extended the Great Depression for a decade, when it could have been over in under 2 years, if market forces had been allowed to play out.
It took World War Two, to finally get us out of the depression, If Obama's New Raw Deal goes into effect, it may take World War Three, to get us out of the Next Great Depression. (We didn't have nukes in 1941)
Basically, all I can say is, Fasten your seat belts folks, it's gonna be a long bumpy ride.
As always, comments are welcome and encouraged. :o)