Free Markets, Free People

The Dishonesty Inherent In The Administration’s Economic Claims

David Brooks, 3 days after a semi-courageous, “what-the-heck-is-going-on” column, received calls from the senior staff at the White House and quietly got back in line:

In the first place, they do not see themselves as a group of liberal crusaders. They see themselves as pragmatists who inherited a government and an economy that have been thrown out of whack. They’re not engaged in an ideological project to overturn the Reagan Revolution, a fight that was over long ago. They’re trying to restore balance: nurture an economy so that productivity gains are shared by the middle class and correct the irresponsible habits that developed during the Bush era.

The budget, they continue, isn’t some grand transformation of America. It raises taxes on energy and offsets them with tax cuts for the middle class. It raises taxes on the rich to a level slightly above where they were in the Clinton years and then uses the money as a down payment on health care reform. That’s what the budget does. It’s not the Russian Revolution.

How moderately wonderful, right? They’ve now dazzled Brooks again. They’re not “liberal crusaders”, they’re moderate pragmatists who want to lend stability to the economy.

Brooks then goes through a litany of things “Republicans should like”. He finishes up by claiming he still thinks they’re trying to do too much too fast, and that may lead to problems “down the road”, but all in all, he’s impressed by their sincerity, commitment to what is best for America and the fact that all of this is not going to cost anywhere near what all the critics claim.

On their face, the arguments are nonsense. This is the biggest planned expansion of government in a century. Estimates are the federal government will be hiring between 100,000 and 250,000 new employees to oversee its new programs and spend the trillions of dollars being borrowed through debt instruments right now.

Unlike the rather facile and easy to impress Brooks, Charles Krauthammer takes a look at the spin and deconstructs it rather handily.

At the very center of our economic near-depression is a credit bubble, a housing collapse and a systemic failure of the entire banking system. One can come up with a host of causes: Fannie Mae and Freddie Mac pushed by Washington (and greed) into improvident loans, corrupted bond-ratings agencies, insufficient regulation of new and exotic debt instruments, the easy money policy of Alan Greenspan’s Fed, irresponsible bankers pushing (and then unloading in packaged loan instruments) highly dubious mortgages, greedy house-flippers, deceitful homebuyers.

The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.

And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.

As Krauthammer points out, none of the costly things that Obama pledged to focus on have anything to do with the down economy. They all do, however, include the  the probability of causing even more damage if enacted.

And since they’ve been in office, Obama or his surrogates (mostly in the guise of Timothy “tax cheat” Geithner”) have talked down the stock market, the auto industry, the oil and gas industry, the health care industry, energy, banks, financial and the defense industry. They still don’t seem to realize what impact their words have on markets, or if they do, then one has to assume they’re doing this on purpose. I tend toward the side of ignorance, but at some point, after it has been pointed out to them over and over again, you have to abandon that belief and head toward the other conclusion. Their words, quite literally, are wrecking the economy.

Markets can’t stand instability and insecurity. When leaders talk about what’s wrong with this industry or that industry and what they intend on doing to punish or change how that industry does business, investors get very nervous. As you might imagine, they’re extremely nervous right now, as reflected by the Dow. They know that there is a government assault coming, in some form or fashion, on the industries I’ve mentioned. So they’re going to get out of the position they now hold in them and they’re going to refrain from investing in them until they’re clear what that assault will entail. And I don’t use the word “assault” lightly.

Health care, defense, oil and gas, pharma, auto, energy, housing, banking, finance etc. are all under a form of assault by the new administration. Health care will change and expand dramatically under government auspices, oil and gas will lose tax breaks, cap-and-trade will bury the auto industry and shoot energy prices through the roof – affecting transportion and manufacturing. Cram-downs affect the housing, banking and financial sectors. Who wants to invest in any of that when a judge can reward irresponsible home owners with a write down of their principle? Meanwhile responsible home seekers will see the interest rate go up by about 2 points to cover the losses. That’ll spur homebuying, won’t it?

Like Dale pointed out about the Red Kangaroo, you can see this coming from a mile off. And “useful idiots” like David Brooks climb back on the bandwagon and resume cheering the parade to economic ruin.

~McQ

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21 Responses to The Dishonesty Inherent In The Administration’s Economic Claims

  • Obama lied
    The Dow Jones died.

  • “In the first place, they do not see themselves as a group of liberal crusaders. ”

    I am quite certain Hitler did not see himself as a mass murdering monster either.

    Obama lied
    The DOW JONES died.

  • LOL! You dense righties just don’t get it, do you. Brooks is a moderate pragmatist. Everyone who supports Obama is a moderate pragmatist. I decree it.

    Thank goodness the Bush regime is over, and we can get on with having universal health care, total regulation or maybe even outright ownership of the finanacial system, saving Social Security and Medicare by raising taxes on anyone who still has any money left, and especially punishing dense righties who have the nerve to think that they own the money they make. Don’t you realize you only make that money by the grace of the all-benificent state? And if we moderate pragmatists decide to take it away to do much more holy and wonderful things with it, well, it’s your job to go out there and work harder and give us more. I decree it.

    But that’s not socialism, no matter how much you thick righties want to insist it is. And it’s not fascism either, no matter how many resemblances to Nazi Germany you dredge up. I’m an expert on Germany, and with my godlike power of postmodern political science, I can assure you that if we say it’s not socialism, then it’s not. And since our comrades, I mean colleagues in the media will back us up on this, you foolish righties will have to resort to your silly “tea parties” that will continue to be ignored by the media.

    How could you even think you could resist the wave of hope and change that is descending on us *eyes rolling*? We wise leftists have refined our techniques for years, and Obama is a disciple of the wise prophet Saul Alinsky, and we will prevail. Suck on it.

    Besides, this economic crisis was inherited by Obama, and in fact is the work of nearly three decades of living beyond our means. And you libertarians who protested that we were doing that all along don’t count! Stop saying that! Only we wise leftist pragmatists can pass judgement on these kinds of issues, because we are the only ones who can construct a flexible narrative and take all points of view and put so much stuff out there that we are proven right no matter what happens. Instead, you dense righties rely on prinicple *eyes rolling*!

    The fact is the past system has collapsed and a new one is being built — and I think Obama has the right approach in building it, and making sure we don’t forget the people and ideas that led to this collapse. And we leftists were not part of the ideas that led to the collapse, oh no. Just because we were the ones who put in place Social Security, Medicare, agricultural subsidies, forced loans to low-income home buyers, Medicaid, vast bureaucracies such as FDA and SCC, and thick volumes of regulation such as CPSA, ADA, and Sarbanes-Oxley is no reason to blame the problems on us! No, all of those things had the very best of intentions, and if we have to tax you guys into oblivion to support them, then so be it.

    You guys are too funny. You actually think you can hold a candle to wise pragmatic leftists like me. Well, come on over to my blog and prepare to be entranced by my ability to talk out of all four sides of my mouth, as I prepare to be able to come back in a year or two and explain how I had it all right. No matter how things turn out.

    • Maybe we dense righties should go on the dole.  After all, in the opinion of many people a lot like Scott, we’re barely able to breath and walk at the same time.   Not sure where he’ll get his money for funding if we stopped working and started collecting, but I’m SURE he’ll have a brilliant plan, aren’t you?  Arbeit macht Frei they say!

    • Hey, a–hole:

      The Bush regime lives on in the form of an illegal war and a failed economy.  Two things you’ll never see the a–holes on this site acknowledge.  They’d rather lap up the nector of leftist hate mongering than simply admit I’m right about this.

      Prost.

  • Shorter Brooks:  "I thought I was wrong, but I was mistaken."

    He actually gets paid for this drivel.  Probably not for long though. 

    Times Select was implemented incorrectly.  If they offered a service guranteeing that I’d never have to read or listen to any of their columnists, or anyone who wrote about their columnists, I’d gladly pay $50 a year.

  • Brooks is a moron, who has lost his mind due to NY Times liberalitis.

    No person exposed to that disease can expect to remain sane. Brooks is obviously a victim of it.

  • A better one:

    OBAMA LIED.

    THE AMERICAN ECONOMY DIED.

  • Transcript of the meeting:

    No more party invites for you, Davy boy.

    “The Chicago Way”tm

  • So, any takers on Krauthamer becoming the focus of a White House press conference on Monday?

  • Dear Mr. Brooks,

    If you acn act fast, we have a great deal for you on a historical bridge in NYC. 
    Don’t loose out on this great opportunity. Hurry and call today.

    Senior staff member,
    The White House
    1600 Pennsylvania Avenue NW
    Washington, DC 20500
    202-456-1414

  • PumpMahone says:

    “The Bush regime lives on in the form of an illegal war and a failed economy”

    IDIOT

    Congress wrote Pres Bush a blank check and you want to call it illegal when he cashed it.

    http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ243.107

    a) Authorization.–The President is authorized to use the Armed
    Forces of the United States as he determines to be necessary and
    appropriate in order to–

                (1) defend the national security of the United States
            against the continuing threat posed by Iraq; and
                (2) enforce all relevant United Nations Security Council
            resolutions regarding Iraq.

    Stop with the illegal war mime.  Congress voted for the resolution and gave Pres Bush the AUTHORITY to go to war.

    Meanwhile everytime Obama opens his mouth the Dow Drops another 200 points.
     
    Obama lied
    The DOW JONES DIED.
     
     
     
     

    • its a parody man.  :)

      But I get your point.  It is hard to tell the difference.

  • Note that the stock market tanked early in Reagan’s administration as well.

    The current crisis was caused by decades of living beyond our means.  Health care costs are a real part of this crisis.  We need to restructure the economy.  The deregulation regime has failed.  Europe is suffering too from the American contagion, espeically via AIG.  This is a new era, you’ll have to get used to it. 

    • “The current crisis was caused by decades of living beyond our means.”

      I agree.  So, do you think that government (the momentous power of the mob at this point) will help people learn to live within their own means?  I know that it can attempt to force them, but how far must it go and does it really work?

      “Health care costs are a real part of this crisis. ”

      You may be right, in part, but I don’t think that you know why you are right.  If individuals are allowed to reprioritize the things in their life, where do you think that their physical well-being would fall out?  I guess not everybody has to have the best house or best car or Playstation 3 immediately, but imagine if the people who do (did) think that they need to take care of their physical well-being first. 

    • “The current crisis was caused by decades of living beyond our means.”

      Yep.  I’ll agree with you there.  Here’s a tip though: the solution to living beyond your means isn’t to live *even further* beyond your means.  And per health care, the sector currently suffers from a vastly inefficient as wasteful 3rd party payor system.  The solution to that isn’t to expand the 3rd party payor system even greater AND put it in the hands of an inherently inefficient (much more so than private insurance!) Medicare system.

  • The new thinking on the Great Depression suggests that due to uncertainty in what kind of economic system we would have, private investors sat on the sidelines for many years. I think Obama is having a similar effect, especially as people start to notice his “pragmatic” promises never seem to come to fruition, but everything else does.

    On a personal note, I am getting pretty sick of the MSM cover for Obama. The Economist, which used to be somewhat centrist, just told me that Obama’s budget numbers used far less trickery than Bush’s and that his plans would cut the deficit nicely. Excuse me? Bush used trickery -fine. But Obama extrapolating a decade of surge type costs for Iraq and then “cutting” them? The journos can’t catch that? They also worried about growth not picking up enough.  Then they also told me that Obama missed a chance to reform our tax system by taxing the rich, the corporations, and carbon emissions. Seriously? This is a good idea in a recession or even once were out? How is that going to help growth? Its completely insane. I am thinking of cancelling my subscription.

  • Apart from the deception pointed out here and by Krauthammer, if you read Krauthammer’s column next to the description of Hoover in “The Forgotten man,” some of the parallels are scary:
    http://tinyurl.com/bzqxvc