Free Markets, Free People
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.
Ben White at Politico tells us:
Obama has been happy to be seen by voters as cracking down on Wall Street but those efforts have had an unintended result: feeding a sense that the president and his party are indifferent or even actively hostile toward big business, whether those businesses are Silicon Valley tech companies, Midwestern manufacturers or Main Street small businesses.
And it is more than just politics: Obama’s aides believe confidence in the general direction of White House policy has an effect on the willingness of corporations to hire, invest and push the economy toward a more solid recovery.
We’ve all heard about the $1.8 trillion that companies and corporations have saved while they sit on the side-lines refusing to invest or hire. We’ve seen the likes of Mort Zuckerman declare that the policies and attitude of the administration are decidedly "anti-business". And we’ve seen little or no evidence that anything the government has done has, in fact, spurred economic recovery.
So – what’s the administration’s answer? A public relations campaign where they essentially tell us things have happened we know haven’t, take credit for things they had little to do with and essentially try to spin their way out of the "anti-business" label.
Or, “business as usual”:
So the White House has launched a campaign to help instill that confidence, highlighted by Obama’s remarks on Wednesday stressing his commitment to lifting trade barriers as a way to spur economic growth. That was followed by Treasury Secretary Timothy Geithner’s interview on CNBC’s “Kudlow Report” last night — following his spot on PBS’ “NewsHour” on Tuesday. Obama talked up the economy in Missouri Thursday as well.
In a Thursday interview, White House chief of staff Rahm Emanuel argued that rather than recoiling against Obama, business leaders should be grateful for his support on at least a half-dozen counts: his advocacy of greater international trade and education reform open markets despite union skepticism; his rejection of calls from some quarters to nationalize banks during the financial meltdown; the rescue of the automobile industry; the fact that the overhaul of health care preserved the private delivery system; the fact that billions in the stimulus package benefited business with lucrative new contracts, and that financial regulation reform will take away the uncertainty that existed with a broken, pre-crash regulatory apparatus.
But you see, businesses know all of that and they aren’t “grateful”, they’re alarmed. Not only that, they don’t see private banks and financial institutions as the sole problem in the financial meltdown – but they do see government trying to pretend it was all Wall Street and greedy corporations, while Freddie and Fannie have become half a trillion dollar financial sink holes that politicians don’t want to talk about.
They also understand that the Bush tax cuts are expiring, new health care laws and taxes are pending, new and onerous regulations are in the offing and the lame duck Congress will most likely try to push through some version of cap-and-trade. Add to that failing states like Illinois and California and the probability of higher taxes all the way around.
And then there’s the possibility of a double-dip recession.
Why wouldn’t business be sitting on their money given the “rest of the story” that the administration conveniently leaves out of their pitch?
This is a crew that has supreme confidence in their ability to propagandize anything and get away with it. And why shouldn’t they – look who is sitting in the White House. You’d have to believe if you can sell an empty suit to a majority of the nation, you can probably sell anything.
The annual gathering of the “intelligentsia” at the Aspen Ideas Festival in Aspen CO would normally be a love fest for left leaning politicians like Bill Clinton and Barack Obama. It’s a veritable “Who’s Who” of leftish thinkers.
But this year, for some reason, it isn’t a place where Barack Obama would feel particularly comfortable, it seems. Speakers have been anything but complimentary on the current administration’s policies or the direction of the country.
One of his recently more outspoken critics is Mort Zuckerman, owner of the New York Daily News and editor-in-chief of US News and World Report. On a panel shared with Harvard business and history professor Niall Ferguson, Zuckerman was none to kind to the present commander-in-chief or his economic policies:
“We are, without question, in a period of decline, particularly in the business world,” Zuckerman said. “The real problem we have…are some of the worst economic policies in place today that, in my judgment, go directly against the long-term interests of this country.”
And why does Zuckerman – a business owner in his own right – feel this way:
Zuckerman added that he detects in the Obama White House “hostility to the very kinds of [business] culture that have made this the great country that it is and was. I think we have to find some way of dealing with that or else we will do great damage to this country with a public policy that could ruin everything.”
Those aren’t words couched in nuance or diplomacy as one can immediately tell. Those are the words of a man – an Obama supporter – who has come to the realization of how serious a mistake he and others who supported this President made.
Ferguson was no less critical. Panning the policy which has kept extending long-term unemployment benefits, Ferguson said, “Long-term unemployment is at an all-time high in the United States, and it is a direct consequence of a misconceived public policy.”
And, adding to Zuckerman’s “nation in decline” observation he said:
“The critical point is if your policy says you’re going run a trillion-dollar deficit for the rest of time, you’re riding for a fall…Then it really is goodbye.” A dashing Brit, Ferguson added: “Can I say that, having grown up in a declining empire, I do not recommend it. It’s just not a lot of fun actually—decline.”
When the “S” word found its way into the conversation, Ferguson was a little less forthright with his answer:
“If you’re asking if the United States is about to become a socialist state, I’d say it’s actually about to become a European state, with the expansiveness of the welfare system and the progressive tax system like what we’ve already experienced in Western Europe,”
Or, “yeah, the US is headed that way”. Ferguson also warned that in essence we were moving toward becoming an “implicit part of the European Union” and he warned, “I’d advise against it”.
Ferguson even complemented Republican Paul Ryan’s “Roadmap” as the “radical, root-and-branch reform not only of the tax system but of the entitlement system” that is necessary to “unleash entrepreneurial innovation.”
That won’t exactly come as music to the ears of Peter Orszag and Larry Summers who are expected at the event later this week. Summers has come under criticism as well for his explanations of why the recovery was to this point jobless.
Sitting in the audience, clapping enthusiastically with all the rest of the invited were Barbara Streisand and her husband James Brolin – neither of whom would be described as from the conservative set. When asked, at the conclusion of the panel discussion, for their impressions they said:
“Depressing, but fantastic,” Streisand told me afterward, rendering her verdict on the session. “So exciting. Wonderful!”
Brolin’s assessment: “Mind-blowing.”
Actually, it is more mind-blowing than one might imagine. If Obama has indeed lost the likes of Zuckerman and Ferguson that’s certainly a blow to him. But if even the likes of Streisand and Brolin can see the problem and its origin, he has most assuredly lost a good part of the left.
Mort Zuckerman, editor-in-chief of US News and World report writes a blistering piece that certainly seems to indicate that’s the case. Zuckerman says the world sees Obama as “incompetent and amateur” and that on the world stage he is “well-intentioned but can’t walk the walk”. That’s a nice way to say he’s a lightweight in an arena where only seasoned heavyweights prosper.
Zuckerman’s opinion is not one to be taken lightly. He was a huge Obama backer. He voted for him. His newspaper, the NY Daily News, endorsed him and was enthusiastic in his support of the Obama candidacy.
Now, 16 months into his presidency, he’s obviously very disappointed in his choice. And, it would appear, has come to understand that which he didn’t know or didn’t bother to find out about Obama at the time – that he has no leadership skills or abilities and is, in fact, more of an academic than a Commander-in-Chief.
Zuckerman is a keen and long time observer of American foreign policy, and as such he has the ability to compare and contrast what American foreign policy has seemed like under different presidents and under this one. He begins his critique of Obama by saying he actually inherited a “great foreign policy legacy enjoyed by every recent US president.”
Of course to hear Obama talk about it you’d think he’d been handed the worst mess in the world. But even assuming that, what has Obama done? Not much – and that’s beginning to become evident to the rest of the world. Says Zuckerman:
Yet, the Iraq war lingers; Afghanistan continues to be immersed in an endless cycle of tribalism, corruption, and Islamist resurgence; Guantánamo remains open; Iran sees how North Korea toys with Obama and continues its programs to develop nuclear weapons and missiles; Cuba spurns America’s offers of a greater opening; and the Palestinians and Israelis find that it is U.S. policy positions that defer serious negotiations, the direct opposite of what the Obama administration hoped for.
So success in the field that is exclusively the President’s has been elusive. Then there’s Obama the “leader”:
The reviews of Obama’s performance have been disappointing. He has seemed uncomfortable in the role of leading other nations, and often seems to suggest there is nothing special about America’s role in the world. The global community was puzzled over the pictures of Obama bowing to some of the world’s leaders and surprised by his gratuitous criticisms of and apologies for America’s foreign policy under the previous administration of George W. Bush. One Middle East authority, Fouad Ajami, pointed out that Obama seems unaware that it is bad form and even a great moral lapse to speak ill of one’s own tribe while in the lands of others.
Seems to be common sense to the rest of us, yet it is hard for anyone, even his most ardent supporters, to deny he’s engaged in more of that than any useful diplomacy.
Zuckerman also notes something I commented on months ago. He has no personal relationship with any of the world’s leaders. And that is critical to success in foreign diplomacy:
In his Cairo speech about America and the Muslim world, Obama managed to sway Arab public opinion but was unable to budge any Arab leader. Even the king of Saudi Arabia, a country that depends on America for its survival, reacted with disappointment and dismay. Obama’s meeting with the king was widely described as a disaster. This is but one example of an absence of the personal chemistry that characterized the relationships that Presidents Clinton and Bush had with world leaders. This is a serious matter because foreign policy entails an understanding of the personal and political circumstances of the leaders as well as the cultural and historical factors of the countries we deal with.
His meeting China was also a disaster and he was treated almost disrespectfully there. And he’s all but deep sixed our “special relationship” with the UK and certainly isn’t much loved by Sarkozy of France. Don’t even begin to talk about Israel.
These sorts of problems and perceptions have an effect in international affairs. A perfect example?
Recent U.S. attempts to introduce more meaningful sanctions against Iran produced a U.N. resolution that is way less than the “crippling” sanctions the administration promised. The United States even failed to achieve the political benefit of a unanimous Security Council vote. Turkey, the Muslim anchor of NATO for almost 60 years, and Brazil, our largest ally in Latin America, voted against our resolution. Could it be that these long-standing U.S. allies, who gave cover to Mahmoud Ahmadinejad and Iran’s nuclear ambitions, have decided that there is no cost in lining up with America’s most serious enemies and no gain in lining up with this administration?
So they go their own way in the absence of US leadership. This week, Russia’s President Medvedev criticized the US for placing additional sanctions on Iran, above and beyond the UN’s rather pitiful ones.
Obama has been a foreign affairs disaster to this point, and as Zuckerman points out, this has sent a very clear message to many of those out there who wish us ill as well as those who count themselves as allies:
America right now appears to be unreliable to traditional friends, compliant to rivals, and weak to enemies. One renowned Asian leader stated recently at a private dinner in the United States, “We in Asia are convinced that Obama is not strong enough to confront his opponents, but we fear that he is not strong enough to support his friends.”
I think at this point, that’s a perfectly defensible and accurate assessment. This is why I continue to say that there are some pretty heavy storm clouds brewing on the international horizon. US leadership is seen as missing or weak – a perfect time for those who take advantage of power vacuums to step forward and make their particular grabs for power.
Don’t be surprised to see it happen soon.
The vaunted stimulus which President Obama claims is doing exactly what it was supposed to do is seen by a majority of others as a complete bust.
About 40% of U.S. workers believe the recession will continue for another full year, and their pessimism is justified. As paychecks shrink and disappear, consumers are more hesitant to spend and won’t lead the economy out of the doldrums quickly enough.
It may have made him unpopular in parts of the Obama administration, but Vice President Joe Biden was right when he said a week ago that the administration misread how bad the economy was and how effective the stimulus would be. It was supposed to be about jobs but it wasn’t. The Recovery Act was a single piece of legislation but it included thousands of funding schemes for tens of thousands of projects, and those programs are stuck in the bureaucracy as the government releases the funds with typical inefficiency.
As I and many others pointed out when it was being passed, the stimulus package was nothing more than a collection of porky earmarks on an unprecedented level. It was a lefty wet-dream come true – full access to the treasury and the power to do whatever they wanted. Democrats finally had the power to reward themselves and their constituencies and they took full advantage of it.
This wasn’t a “misreading” of the economy as Joe Biden likes to claim, but a misappropriation of funds to fulfill political dreams and promises that had been denied them for years.
Zuckerman wants to wave off the problems with execution to the “typical inefficiency” of government (but I bet he’s all for the government expanding its role in health care), but this recovery act isn’t just about government inefficiency or bureaucracy. It’s about where the Recovery Act’s money is aimed – and it isn’t aimed at creating jobs.
That’s why, despite the dire claim that if the Recovery Act wasn’t passed, unemployment would rise above 8%, unemployment continued to rise, unabated, to 9.5%. And it will climb higher. It was never targeted at creating (or even saving) jobs. Nor was it targeted toward stimulating the economy (by getting money out in the economy and circulating).
It was a 787 billion dollar payoff/payback pork bill – something both Obama and the Democrats denied but which was obvious to anyone who took the time to look into the provisions of the bill itself.
And now we’re supposed to believe that the economy was worse than they thought and they simply “misread” it.
For those of you paying attention, this is all a prelude to claiming a second “stimulus” is necessary, after having misappropriated almost a trillion of your dollars previously to pay off their political debt.
The answer, of course, is “no”.
They’ve already proven they can’t be trusted to address the problem at hand without succumbing to the lure of political payoffs. And, in fact, they gave those political payoffs higher priority than the economic distress we are suffering. They should not be given the opportunity to misappropriate anymore of your money to repeat the process.
Because they will.