OBAMA HASN’T SHEATHED HIS SWORD OF FEAR QUITE YET
With Democrats retreating on some of President Obama’s agenda items, the President went on TV last night to try and drum up some grass roots support for his budget and bail out policies.
It’s getting to be a tough sell - both for Congress and the American people. I thought the president did a good job of presenting his case, boiling down complex ideas and concepts into digestible chunks. He did less well in responding to some very pointed questions from the press on AIG, the mess at Treasury, and the building perception that he is taking the country somewhere it doesn’t want to go.
But all in all, I’d grade Obama’s performance a solid B-. And I’m sure, he’d take that grade and run given the dismal fortnight his Administration has endured.
It struck me watching our president last night(and was reinforced after reading the transcript), that President Obama knows about as much economics theory as I do - perhaps less. Ordinarily, this wouldn’t matter because my knowledge of the “dismal science” is slightly above that of a three toed sloth and trying to come to grips with what our government has been doing lately is something akin to watching the above mentioned sloth attempt to climb down from a tree; an extremely slow process with no guarantee I’ll ever make it.
Surely the president couldn’t have been serious when he said this:
Finally, the most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country. We know that an economy built on reckless speculation, inflated home prices, and maxed-out credit cards does not create lasting wealth. It creates the illusion of prosperity, and it’s endangered us all.
The budget I submitted to Congress will build our economic recovery on a stronger foundation so that we don’t face another crisis like this 10 or 20 years from now.
We invest in the renewable sources of energy that will lead to new jobs, new businesses, and less dependence on foreign oil. We invest in our schools and our teachers, so that our children have the skills they need to compete with any workers in the world.
We invest in reform that will bring down the cost of health care for families, businesses and our government.
And in this budget, we have — we have to make the tough choices necessary to cut our deficit in half by the end of my first term, even under the most pessimistic estimates.
Returning to “an economic cycle of bubble and bust” is, I’m afraid, historically unavoidable. If you are going to have free markets, you are going to have periods of prosperity and periods where the markets “correct” imbalances. If Obama wishes to repeal the business cycle, he will need to throw the idea of free market capitalism under the bus - something he has shown great eagerness to do.
As for the rest, how renewable energy companies will avoid being caught in the business cycle he doesn’t deign to tell us. Presumably, these companies will be subject to the same market forces that all other start ups are which means most will fail while the precious few winners will thrive. And since no western country has yet figured out how to get the cost of health care under control without rationing, it’s no wonder that Obama didn’t mention it since most Americans would recoil at some of the practices found in nation’s as diverse as Canada and Japan.
But all this is beside the point. With most inside the beltway pundits having determined Obama’s “honeymoon” is over, the president’s ability to dominate the agenda and pretty much get almost everything he wants is slipping away. His personal popularity remains very high which counts for a lot (despite his supporters ignoring his request for the most part last weekend to sign up their neighbors for Obama’s army). The three million contributors to his campaign are still there, waiting to be activated to put pressure on Congress to enact his ambitious and ruinously expensive agenda. So far, they have been quiescent. It is way to soon to tell whether it’s because the Administration hasn’t made a supreme effort to motivate them or because they were a mirage all along. We shall see.
Even if the president can’t get his supporters off their duffs to lobby for him and even if his short lived honeymoon may be coming to an end, the president still has one weapon in his arsenal that he will apparently continue to use in order to get his budget passed.
And that weapon is fear:
At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt. It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.
And that’s why clean energy jobs and businesses will do all across America. That’s what a highly skilled workforce can do all across America. That’s what an efficient health care system that controls costs and entitlements like Medicare and Medicaid will do.
That’s why this budget is inseparable from this recovery: because it is what lays the foundation for a secure and lasting prosperity.
The fact is, his budget does continue “the very same policies that have led us to a narrow prosperity.” It just shifts the wealth around a bit. To believe that this will lead to an era of “save and invest” is ludicrous. And if it does, our prosperity will be very narrow indeed. Will Obama’s budget change people’s attitudes about “maxing out their credit cards” and piling on debt? I would say that a psychiatrist is called for at the White House if our president believes that.
The “save and invest” model was excellent for the 1950’s and 60’s when America was the workshop of the world and manufacturing was such a huge component of our economy. The American brand was so dominant that people could afford to put something away every week at 2-3% in a savings account because economic growth wasn’t as dependent on spending. Dollars churned through the economy mostly in the same community they were invested.
But we don’t make much here anymore and markets are now global. The economy is based - for better or worse - on consumer spending. More savings and investment would be very good as well as the notion that Americans shouldn’t go into hock up to their eyeballs. But what Obama is calling for is a massive reordering of economic priorities. And since he can’t realistically expect his budget to do that, he is simply fear mongering when he tries and connect the budget to the recovery.
It’s the only weapon he has used since he took office to get what he wants. He successfully frightened Congress into passing his stim bill (which no one read). He has used the specter of economic collapse to bail out his friends in the UAW. And he has deliberately fostered the notion that everyone agrees with him that all of these steps are necessary to “save” the economy. Opposition to his policies are politically motivated and insincere with the GOP hoping for catastrophe.
It has been effective in the past so why not go to the well again on the budget? But his act may be wearing a little thin with Congress and the people themselves may be tiring of listening to their own president trying to scare them into making it his way or the highway.
One thing appears certain - he has a helluva fight on his hands with a budding coalition of Republicans and blue dog Democrats who may eschew Obama’s fear mongering for crafting a budget that they can be re-elected on in 2010. By then, all the fear mongering in the world by the president will not hide the damage he has done to the economy or the violence he has done to the free market.
I pretty well agree with you although I probably would give the president a solid “C” due to his boring delivery. What also has grown stale is his strawman bullshit, such as “while others say we need to do nothing…” I really haven’t heard anyone say such a thing, although as our Economic-Illiterate-in-Chief continues to make things worse that probably isn’t a bad alternative (I don’t buy that he has intentionally set out to wreck the economy, at least not yet). Also, as he continues an unprecedented spending orgy his claims of deficit reduction have passed from the laughable into the surreal. For the sake of the country, I hope he realizes this is just deceptive rhetoric.
This has started to look like the shortest honeymoon in history. Fuck, even some of the reporters started to push back last night. I thought that would take at least six months, but he has not paid them the homage they expect so it isn’t a surprise.
Comment by jackson1234 — 3/25/2009 @ 8:57 am
Two months into Obama’s term and the housing market may have found a bottom, and the stock market may have found a bottom. Suddenly the word “depression” is falling out of vogue.
Which means the CBO deficit estimate may actually be high. But I have no psychic powers, so I guess we’ll see.
Had we actually paid for the trillion deficit dollars we spent on the war — by raising my taxes to Clinton levels for example — we’d have a bit of slack now to cover the cost of climbing out of this Republican economic ditch. (Similarly, the prescription drug plan.) I don’t recall a lot of Republicans suggesting that. I recall a lot of Republicans yelling that we had to spend whatever we had to spend and could not raise taxes or we’d end up in a ditch. The same ditch we ended up in.
Nevertheless, I welcome the GOP’s sudden, partial, inconsistent, hypocritical and politically expedient return to fiscal prudence. We need a GOP that wants to spend less, that’s your natural role in the world. And so much more attractive than listening to Chairman Rush race bait.
The specter of depression is more pronounced then ever. And beyond that, how does hyperinflation grab ya?
We are so not out of the woods yet your attempts to find the pony in all that horseshit is laughable.
ed.
Comment by michael reynolds — 3/25/2009 @ 9:23 am
I agree. It’s horrible that politicians would use fear to further their agenda. Agendas that obviously have more to do with power grabs and cronyism than the betterment of our great nation.
This piece has made me so afraid of this reckless President and his fear based policies that I’ll be voting Republican in 2010. Obama’s fear mongering seems completely out of control, and that really scares me.
Comment by Chuck Tucson — 3/25/2009 @ 9:53 am
One thing: when Obama says “invest” or “investments”, he means taxes, or at least the government spending money on stuff. He does not mean putting money to work in the private economy. He consistently uses “invest” and “investment” in speeches to refer to government activity - as is common among leftie policy types - and I’ve never seen a context where he means “buy a stock” or “fund a business startup” when he says “invest”.
Comment by Foobarista — 3/25/2009 @ 10:50 am
Foobarista:
And where do you suppose he’s going to spend that tax money? At Tax-Mart? If we put a billion dollars into, say, building a bridge, I kind of think it’s going to go to Joe’s Bridge Building Company. Joe’s going to buy some stuff from Caterpillar and from Frank’s Cement. And then Joe’s workers and Frank’s workers and Caterillar’s workers will spend their pay at Sears, Target, Wal-Mart. And then all those retail folks will spend their money at McDonalds. Right? Money flowing from the taxpayer to the private sector.
So, in other words, you’re wrong.
Comment by michael reynolds — 3/25/2009 @ 12:35 pm
By the time the bridge money passes through the hands of Pelosi, Dobb, Frank and their cronies, there conceivably might be enough of that billion left to buy lunch at McDonald’s. I’m not sure about the concrete, though. Whoops, I forgot, that astute auditor in the form of Joe the Pl…make that Joe the Biden..is on top of all the waste. Memo to Joe: concrete doesn’t cost two million dollars a ton. Big Macs go for less than a bill, too.
Comment by jackson1234 — 3/25/2009 @ 12:53 pm
What is going to really set off the flyover country residents is Organizing for America - a new campaign by Obama seeking individual Americans to pledge to support the President’s left wing agenda. In the course of that door-to-door campaign, the volunteers will be collecting information about you as well as asking you to then ask your neighbors to join in.
In the immortal words of Nancy Reagan, Just Say No!
Comment by Gayle Miller — 3/25/2009 @ 12:59 pm
Most of the money will be wasted. Even “infrastructure” spending will be spent badly, on pork-barrel projects, using monstrously expensive, politically connected contractors. Spending on education will disappear in a black hole of bureaucracy as it always does.
The problem is government needs to be fundamentally restructured. But Obama won’t do it - he’s never seen a collection of bureaucrats he didn’t coddle.
Comment by Foobarista — 3/25/2009 @ 2:05 pm
three toed sloth strikes again. Nothing much objectionable in what Obama said from the point of view of economic theory. The comment about “bubble and bust” is an empirical statement, not a theoretical statement. And yes bubbles and busts are avoidable, that is the job of the fed to constrain, to take away the punchbowl before the party gets started as Greenspan would say… the business cycle, which is what you are referring to, is unavoidable, but this is not what Obama is talking about. They (his advisers) vetted these statements anyhow. I am not claiming Obama knows more than a three toe sloth, but his advisers certainly do. Sorry Rick.
Comment by Josh — 3/25/2009 @ 3:58 pm
Foobarista said:
What are your ideas for this fundamental restructuring?
Comment by Chuck Tucson — 3/25/2009 @ 4:18 pm
I will never forget that Bush was handed a surplus and a majority in both the House and the Senate for 6 years. We are only 10 weeks into the new administration. That asshole drove us off a cliff and every person who supported him and his party’s selfish destructive fetishes are to blame. I can’t help but laugh my ass off at every new pathogen of failure Rick tries to tag Obama with. Pathetic, complicit, denial inflicted losers, the lot of you all. You’re lucky we have Socialism at this point.
Comment by the Fly-Man — 3/25/2009 @ 5:12 pm
Basically, a system that allows bad ideas to be found out and permitted to fail, instead of being “rewarded” with more funding. Also, in general, I’d prefer a system with fewer, but better paid and more qualified, civil servants.
In general, the centralized command&control management model used by government is something that hasn’t been used in other parts of our system for many years, and hoping that somehow it’ll somehow work there when it’s been ditched everywhere else but government is silly. Even our democratic institutions are out of scale and can’t possibly provide accountability to the citizens for the vast number of things government is supposed to do.
Modernizing how government is managed is as important as figuring out what it should and shouldn’t do.
I’d also abolish civil-service defined-benefit pensions. We shouldn’t have lifers who’ve spent their entire working lives in government, who are professionally rewarded by rocking the boat as little as possible for X years. People should be able to move in and out of government and private-sector work so ideas move in both directions.
Comment by Foobarista — 3/25/2009 @ 5:37 pm
> Returning to “an economic cycle of bubble and bust” is, I’m afraid, historically unavoidable. If you are going to have free markets, you are going to have periods of prosperity and periods where the markets “correct” imbalances. If Obama wishes to repeal the business cycle,…
There we see the key to understanding Obama’s mistake. He actually things the economy is simple enough that the government can manage it and control. It’s not. It’s too complex for any man or group of men to understand - much less manage effectively.
Sure, there are general prinicples that usually work - but you can’t fine tune the economy enough to get rid of the peaks and valleys of the business cycle. I’m pretty confident you can wreck it, however.
Comment by Arthur — 3/25/2009 @ 5:57 pm
Sounds like the centrists Democratic senators have influenced Obama to tamp down his spending on the budget, which was a good thing. He’s only been on the job for 65 days, under dire straights, he’s learning. We’ll all be fine, just a little patience is needed. I won’t judge him until a year is up.
Comment by Joe — 3/25/2009 @ 6:48 pm
Anyone seen the promised ’stimu-less check yet? Not coming but the wonks who came to the white house from wall street can keep their bonus. BWAHAHAHAHA Insanity is loose in the white house.
The white house gardner got fired. All he did was go in the white house and ask if anyone had seen the ho.
Comment by Scrapiron — 3/25/2009 @ 6:52 pm
Must have been my reception. I heard Obama doing what he always does - a series of straw men, a series of misdirection, a series of lies and an ample helping of the fear of “do this or else doom”. What was absurd was his reference to the narrow prosperity of the past. I’d say that almost 3 decades of prosperity will not be matched in anyone’s lifetime. It’s all blathering.
The Dems in Congress today bought into his budget. Reid is going to fast track nationalized health care. Meanwhile Soros is making billions a year on all this misery.
As some have been saying since last summer, Obama will implement everything in this Congress. Public open really be damned since they won’t get another opportunity regardless. Everything will be either be done outright, slipped in, regulated in or executive ordered in. All the moderates and blue dogs and screaming bloggers notwithstanding. It’s just like the answer to why Tiger Woods married a supermodel - because he can. And he will.
Comment by cedarhill — 3/25/2009 @ 6:55 pm
My favorite part was when he said, “We don’t want a situation in which some countries are making extraordinary efforts and other countries aren’t with the hope that somehow the countries that are making those important steps lift everybody up.” Hhmmm sounds like a familiar scenario within the United States of which Obama has a completely opposite view.
How ironic. When it comes to the people of the US, Obama is fine with hard working people making all the effort so as to enable those who cannot be bothered to get off their arses; all in the hopes that we who work and pay taxes will hold this country together, in all its marxist glory.
This man is a complete joke!
Comment by Conservative Thinker — 3/25/2009 @ 9:38 pm
Rest assured Rick that capital is far more clever than the government we have in place.
You will have again the boom and bust cycle that you crave.
And we will again just like today have innocent victims, people who merely wanted to go to work everyday, save a little, see their kids off, and retire. Your fellow Americans.
These fellow Americans will find themselves in the dustbin of history, proving that the system works. After all, is not history written by the winners? If all you could ever hope for was a steady job, a roof over your head, and hope for your offspring are you then not dull, stupid, and inflexible?
Go ahead and screw your boot in the face of those who chose not to participate in Tulipmania.
Your fear of fear is misplaced. Your fervent wish will again come true. Obama is no obstacle, as capital is far too clever.
Comment by bobwire — 3/26/2009 @ 12:59 am
Obama is an economic nitwit. McCain is an economic halfwit (maybe quarterwit). Heck of a choice we had this go round.
Comment by EBJ — 3/26/2009 @ 7:39 am
And where do you suppose he’s going to spend that tax money? At Tax-Mart? If we put a billion dollars into, say, building a bridge, I kind of think it’s going to go to Joe’s Bridge Building Company. Joe’s going to buy some stuff from Caterpillar and from Frank’s Cement. And then Joe’s workers and Frank’s workers and Caterillar’s workers will spend their pay at Sears, Target, Wal-Mart. And then all those retail folks will spend their money at McDonalds. Right? Money flowing from the taxpayer to the private sector.
You may have missed it but the taxpayer IS the private sector. The gov is going to have to tax the hell out of all the people involved to get the billion dollars back.
Comment by Locomotive Breath — 3/26/2009 @ 3:59 pm