Free Markets, Free People

Zuckerman hammers Obama’s financial and economic policies again

Mort Zuckerman, a former Obama supporter, has again gone after the President’s economic policies as the primary source of the economic non-recovery. In a long opinion piece, Zuckerman spells out the exceptionalism of American business through our history and why it has been able to weather financial storms of the past and come out in much better shape than other countries.

The ‘storm’ metaphor is apt, since Zuckerman likens the Obama policies to “our economic Katrina”. Not the economic problem itself, but the administration and Democratic Congress’s answer to the problem. Here’s his summation:

The unique danger today is the possibility that we may face longer-term stagnation as a consequence of relying too heavily on borrowed money. When the housing and credit bubbles burst in 2007 and 2008, the unemployment rate soared to double digits and caused a cascade of shock throughout the credit markets and the banking system. Washington’s ability to initiate a resurgence is now limited by the long-term dangers of our deficits and our debts.

But one unfortunate pattern that has emerged in the last 18 months is to lay all the blame for our difficulties only on the business community and the financial world. This quite ignores the role of Congress in many areas, but most glaringly in forcing Fannie Mae, Freddie Mac, and the Federal Housing Administration to back loans to people who could not afford them. And not to mention the role of the Securities and Exchange Commission, which in 2004 sanctioned higher levels of leverage for financial firms, from 12 times equity to over 30 times equity.

This predilection to blame business is manifest in the unnecessary and provocative anti-business sentiment revealed by President Obama in a recent speech that was supposed to be seeking the support of the business community for a doubling of exports over the next five years. "In the absence of sound oversight," he said, "responsible businesses are forced to compete against unscrupulous and underhanded businesses, who are unencumbered by any restrictions on activities that might harm the environment, or take advantage of middle-class families, or threaten to bring down the entire financial system." This kind of gratuitous and overstated demonization of business is exactly the wrong approach. It ignores the disappointment of a stimulus program that was ill-designed to produce the jobs the president promised—that famous 8 percent unemployment ceiling.

But it’s not just the rhetoric that undermines the confidence the business community needs to find if it is to invest. Consider the new generation of regulatory rules, increased bureaucracy, and higher taxes created by the Obama administration. For example, the new financial regulation bill includes nearly 500 "rule-makings," studies, and reports, compared with just 14 in total for the controversial Sarbanes-Oxley bill, passed after the financial scandals of Enron and WorldCom. The disillusionment has spread to the Business Roundtable, the U.S. Chamber of Commerce, and the National Federation of Independent Business (NFIB), which represents small businesses that normally account for roughly 60 percent of job creation.

The chief economist of the NFIB, William Dunkelberg, put it clearly: Small business owners "do not trust the economic policies in place or proposed." He also said, "The U.S. economy faces hurricane force headwinds and the government is at the center of the storm, making an economic recovery very difficult."

Our economic Katrina, in short.

Note that even Zuckerman recognizes the government role in the economic turmoil that was generated in late 2008, but also notes that they simply have ignored the government role in favor of blaming business.  Half a trillion dollars have been quietly pumped into Freddie and Fannie and both have been delisted from the stock exchange so investors can no longer monitor them.

Instead the focus has been on blaming the private sector and clamping down on perceived problems with hundreds if not thousands of new regulations. The regulations, of course, will put a new, onerous and costly burden on the business community even while it is that community which is critical to recovery and employment.

In fact, it seems that the administration and Congressional Democrats talk out of one side of their mouths about how jobs are their number one focus (actually unemployment benefits seem to constitute the entirety of the focus) while out of the other side they talk about how “Wall Street and the banks” are the prime villains in our economic woes.

In that atmosphere, as unsettled as any category 5 hurricane can accomplish, business is battening down the hatches, moving everything inside and abandoning the marketplace until the instability subsides and a more pro-business administration is in place.

Instead of doing what it can to settle the market place and put policies in place that encourage and provide incentive to businesses to expand and hire, this Congress and administration continue to wage war on the private economic engine of the country.

And the results remain plain for anyone with a pair of eyes to see.  Stagnation, no growth, high unemployment and the real possibility of a double dip recession.  All to purse the “progressive” anti-business agenda and gain more control over the private economy.  Clearly they simply refuse to let this crisis go to waste, and have chosen to further cripple our ability to recover instead of aiding and abetting it.


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14 Responses to Zuckerman hammers Obama’s financial and economic policies again

  • New York/Philadelphia Fed Manufacturing Reports
    Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants’ interpretation of the Federal Reserve’s dual objectives; most expected the convergence process to take no more than five to six years.

    I guess it all depends on your definition of “Summer”.

  • Has he apologized yet for his full-throated support of this guy? Any contrition? Any admission of just how bamboozled he was (probably due to guilt?)

    • He’s not ready for that yet. Nobody on the lowing, herd-like left has come up with the proper weasel words for why it was a perfectly good idea at the time.

      I’m guessing it will probably something along the lines of “Obama just wasn’t strong enough to stand up against the Rush-Limbaugh-Glenn-Beck right-wing noise machine, and we voted for him thinking he could handle them.” 

    • I wouldn’t push for the apology because he would then be banned from all those parties where he is currently spreading his Obamanomics message of economic armageddon.

  • On the other hand Robert Reich argues that it is not Obama’s economic policies that have caused the problem but the greed of business.
    If it weren’t for big government things would be much worse.
    I guess Reich &  Sheriff Joe received the same memo.

    • That reason is America’s surging inequality.

      In 1993, Congress at the urging of President Clinton passed a “millionaire’s tax” on corporate officers.  In response, corporate compensation was modified to use stock options instead of cash payouts.  In the following decade approximately 10% of all equity in the stock market changed hands from stockholders to corporate officers.  The biggest transfer of wealth in human history.  All thanks to well meaning, do-gooder Democrats.

      • Look at a graph of the DJIA from 1993 to early 1995 when the Repubs took over  (hint: flatter than a pancake, followed by a distinctive upturn).

      • And I am sure Bobby Reich doesn’t charge for his books, speeches, etc. so as not to exceed the median income and contribute to that ‘surging inequality’.

  • Is Zuckerman the new Wendel Willkie?
    I believe Wendell Wilkie initially supported Roosevelt, then turned against his economic policies…

  • [O]ne unfortunate pattern that has emerged in the last 18 months is to lay all the blame for our difficulties only on the business community and the financial world. This quite ignores the role of Congress in many areas…

    There’s another player in this mess who isn’t getting any mention from Mr. Zuckerman: that would be MiniTru.  Funny how Mort doesn’t discuss the role of the media as prime enablers of the government mischief that he decries, don’t you think?  How much coverage did Freddy, Fanny, FHA and SEC get over the past several years – or even the past several weeks – from his own magazine?  After The Dear Golfer and his fellow hoodlums have used the meltdown to take over huge chunks of the economy, NOW Zuckerman tells us that the meltdown was partially government’s fault in the first place.

    But I guess we can’t blame Zuckerman or MiniTru too much.  After all, politicians have been talking for so long out of both sides of their mouths – publicly bashing Wall Street one minute and then quietly passing laws to favor their corporate sponsors the next – that it was reasonable to assume that The Dear Golfer and his gang weren’t any more sincere in their anti-business rhetoric than anybody else.  And MiniTru has been publishing anti-business drivel for so long that they stopped thinking about the vital role business plays in our economy: for all their faults, all those greedy corporate fatcats who sold all those defective products and ran all those inefficient businesses that laid off all those people were otherwise keeping millions of Americans in decent jobs, paying decent benefits, providing a huge number of goods and services at prices that most people could afford, and also paying huge amounts in taxes and charity to provide the social safety net that liberals so love.

    It’s one thing to see to it that corporations and companies obey the law*, but quite another to use the law as a whip to drive them right out of business.  Zuckerman is starting to realize two things:

    1.  The Dear Golfer and his pals in the Congress are set on punishing business, and;

    2.  He and MiniTru, despite their hifalutin rhetoric about being neutral servants of the peoples right to know, are businesses, too.


    (*) “Obey the law” can be a loaded phrase.  As we are seeing, “the law” can become so draconian and byzantine that businesses, especially small ones, cannot operate under it.  In my view, “the law” with regard to businesses should be limited to pretty much enforcing contracts and some reasonable safety regulations as well as seeing to it that businesses do not use underhanded methods to gain a monopoly (which usually involves buying off politicians).  When “the law” starts to concern itself with how much a business must charge, how much it must pay for some other good or service, or how much profit it may make, then it stops being a law and starts being a club to be wielded by the government.