Americans that voted to bring us "Hope" and "Change" last November have now received the first shiny, new product from Obama-Pelosi-Reid & company... the Recovery and Reinvestment Act of 2009, a so-called "economic stimulus" package consisting of approximately $800B in profligate spending. This amount represents a full 6% of US GDP, and is due to rise to well over $1.2 trillion with interest expense... because we're borrowing every cent of it.
It was rushed through the House, bypassing most standard procedural steps, and with all previous promises of public disclosure abandonded. A Rasmussen poll last week showed only 37% public support for the legislation in it's final form. Not one House Republican supported it, and even a dozen Democrats chose not to have their fate chained to this lemon. The Senate then passed their version of the package with a shameful display of expediency by three GOP Benedict Arnolds- Senators Snow, Collins, and Specter. The final version was thus signed into law by Obama on Tuesday.
There are no effective economic multipliers for most of this untargeted spending... meaning little leveraged financial growth can be expected. The Wall Street Journal stated that only 12% of this spendthrift binge could even remotely be considered an economic stimulus. And while Obama promoted it as necessary to address an urgent financial crisis, much of it will take years to work, if ever. This bill is plainly an opportunistic move by Obama to cash-in on our economic concerns, as well as his own political capital... to trigger an huge increase in the size and scope of government in this country.
"You never want a serious crisis to go to waste" said Rahm Emanuel in an unguarded moment- and "We're going to spread the wealth around" said Barack in Ohio last fall. Indeed-
Besides the lack of proven, effective stimulative spending in the legislation, when it comes to the kind of morale-boosting leadership that could help show us the way out of this crisis, Obama has already made it obvious that he's no Vince Lombardi. For a guy who was basking in the triumph of "Hope Over Fear" just three weeks ago, his recent calculated and specious fear-mongering is irresponsible, unhelpful, and appalling. The president employed this technique in scaring legislators and the public into supporting his spending package, proposing vast liberal programs in the name of "saving us all", and heaping as much blame as possible on the Bush Administration... while simultaneously dampening expectations for his own results.
With Obama giving us doomsday forecasts on a daily basis, what little hope any of us had for the economy has been extinguished. His analogies to The Great Depression are not only meant to deceive, they're also inherently reckless. Political brinkmanship consisting of incessant warnings about a pending economic implosion aren't likely to raise consumer or investor expectations any time soon. This ill-advised tactic has almost certainly hurt consumer confidence, delaying any turnaround in spending habits. And instead of the MSM calling Obama on his inaccuracies and/or ulterior motives, they continue to kiss his posterior.
Thus, due to the resulting lack of confidence in our near-term economic prospects, Americans will simply sit on any cash that comes their way from this spending program, either saving or paying off debt... regardless of the amount of money thrown at the problem. Note the almost total lack of economic impact from the Bush "stimulus" passed last year.... while the personal savings rate in the last quarter of 2008 was the highest in six years.
One of the keys to Reagan's economic recovery in the 1980's -when he created 20M jobs and grew the Real GDP by more than 30%- was the sunny optimism he brought to the country with his confident leadership and upbeat, reassuring belief in America. A most vital factor in our overall economic mood is what the president is saying- so if he badmouths the economy, it tanks. And if he is bullish and confident, the markets listen... and are more willing to invest in the future. While Obama is riding a high-tide of support, a little optimism might have done us all a great service... especially in an economic crisis that's rooted in lack of confidence and stability.
Instead, Obama's remarks accentuated the negative, and for political purposes. Everytime dissappointing data was released, to Team Obama it was a sign of impending doom. According to their disingenuous narrative, this economy is the worst since The Great Depression. And without Obama's massive spending bill, we may fall into an abyss from which we will "never recover". This alarmist propaganda may have been useful to Obama politically, but it's inaccurate historically... and betrays very poor leadership qualities.
Back in reality, our current economic challenges don't even come close to those of the 1930's. Even a comparison to the 1981-82 recession is inappropriate at this point. Ronald Reagan was handed by the incompetent Carter Administration almost 11% unemployment, plus double-digit inflation and interest rates. The most recent statistics put the US jobless rate at 7.6%... with low inflation and interest rates approximating zero. And in The Great Depression, jobs were being lost at double or triple the rate of 2008-2009... hitting a peak unemployment figure of 25.2% in 1932.
Auto production in 2008 was dismal, to be sure... declining by 25%. But how does that justify Obama's comparisons to 1932, when US production collapsed by 90%? The failure of a couple dozen banks last year isn't anywhere near the 10,000+ failures of 1933... but you'd never know it from listening to President Obama, out there spreading gloom-and-doom daily to force the passage of his misguided socialist spending spree. Anyone who expected him to act in the best interests of the country -rather than for his own political security and leftist agenda- must not have paid much attention to how he got this far in the first place.
In bad times, banks also hang-on to their money for fear of making bad loans, no matter how many bailouts come their way. With consumers also paying-down debt and saving money, the country will be awash with dollars once the economy gets back on it's feet, stoking vicious inflation sure to bring another recession... as the Fed will have no choice but to hike interest rates dramatically to check it. So Obama's "stimulus" package isn't likely to stimulate much except inflation, and that only once the economy is already improving in the course of the natural economic cycle.
The Democrats have initiated this monstrous spending they know the country cannot afford- so eye-watering taxation will surely be on the way... once the trillion-dollar deficits roll-in, inflation is stoked to double-digits, and the dollar is in the toilet. Thus, forced-upon America will be the liberals' dream of sticking-it to "the rich", deploying a redistributionist agenda through the back door. This legislation is clearly nothing but a socialist Trojan Horse- while presented as a bill to help the economy, it's really just a Democratic Party wish-list of liberal social programs, with an extra-helping of pork for all at the table. Never mind that the millions of Americans making over $150K/yr. that will be soaked to pay for Obama's Marxist-professor-mentors' dreams (plus interest) are largely the job-creating entrepreneurs and small business owners that Reagan famously said are "responsible for almost all the economic growth" in this country.
This legislation will do far more damage than good- and it will hurt recovery by crowding-out private borrowers and consumers as government borrows massive sums to cover the deficit. It will effect a permanent expansion of government, while forcing the country to employ massive tax hikes that no sane candidate would ever admit to planning.
Then there's the socialism-by-stealth scheme that was snuck into the bill, to avoid public outrage... if anyone was still wondering why it was not debated in committee, why legislators only had a day to read it prior to the vote, or why it was not published first online....as Obama had promised repeatedly.
In an under-the-radar move towards nationalized health care, the "stimulus" package includes $19B to modernize health-care information systems, leading to computerization of all medical records by 2014. While that's a worthwhile endeavor, and will create quite a few jobs eventually, this centralization of records appears to be laying the groundwork for the establishment of socialized medicine in this country. The bill also includes another $1.1B for "comparative effectiveness research"- basically studying which treatments work better than others. This looks disturbingly like a first-step towards prioritizing and rationing treatments in a future one-payer system. None of these provisions were subject to any kind of congressional consideration... no committee mark up, no debate on the floor... and of course no public acknowledgement whatsoever. Both were just buried into the bill, like an earmark.
For all the talk of Obama's first legislative "victory", it showed him lacking the political stature to control Pelosi and Reid... who hit the trough hard, while bickering like siblings. And the paucity of GOP co-conspirators exposed the president politically... this legislation now looks to be a huge gamble. When all this pork and welfare fails to generate real economic gains, the Democrats could face a bloodbath in 2010. This is likely to be his first and last chance to get the economy back on-track before the mid-term elections. Team Obama has bet the farm that this legislation will bear fruit, and quickly- while historical precedent suggests there's little chance that it will.
"Now, look, I won't lie to you," Obama told a crowd in Florida last week. "If it turns-out that a few years from now people don't feel like the economy's turned-around, that we're still having problems, that folks are still unemployed, that our health-care system's not more efficient, then, you know, you guys won't applaud me the next time I come down here." And Obama never avoided calling the "stimulus" package "my bill" while promoting it around the country. With almost no GOP support for the measure, there is little political cover for Obama if it doesn't work.
The Democrats now seem nervous as their fiscal Frankenstein comes to life... moving in-haste to dampen expectations, while they cover their backsides. Note how the White House initially said the bill would create 3M jobs... then it was 3.5M... as the debate went on, and public support sagged, it was bumped to 4M jobs. Now that the legislation has passed, it's already dailed-back to 3.5M new and "saved" jobs (whatever those are)... and "patience" was urged before Obama had even signed it.
Barack's shmoozing of the GOP was supposed to bring "bipartisan" support on the Democrats' terms... but with the strict party-line voting, that part didn't go-to-plan. Unfortunately for Obama, he now owns this clunker. This legislation likely presages the death-knell of the mindless Obamamania phenomenon... and it won't take us much more than a year or so to find out.