David Brooks had started down the road to Damascus when he was called back into the fold by Dear Leader. His Op-Ed in today’s NYT is the result.
Most of Brooks’ offering is a rather transparent attempt to shame congressional Republicans into supporting Pres. Obama’s agenda:
The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.
The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.
There are myriad problems with Brooks’ line of reasoning, including many in just to two foregoing paragraphs (e.g. How much input did Republicans have into the recent legislation? By “adopted a posture” is he referring to “not having control of either the House or the Senate”?), but I wanted to focus in on a couple of points in particular.
After some platitudinous admonitions, Brooks launches into his prescription for Republicans to save capitalism:
Third, Republicans could offer the public a realistic appraisal of the health of capitalism. Global capitalism is an innovative force, they could argue, but we have been reminded of its shortcomings. When exogenous forces like the rise of China and a flood of easy money hit the global marketplace, they can throw the entire system of out of whack, leading to a cascade of imbalances: higher debt, a grossly enlarged financial sector and unsustainable bubbles.
I really don’t know what point Brooks thought he was making, but he failed miserably on any score. First of all, “exogenous forces” cannot be “weaknesses” and/or “shortcomings” with capitalism since, by definition, they come from outside that system. At best, examining such forces can be used to understand better ways of protecting capitalism from them. In the context of the entire Op-Ed piece, however, it appears that Brooks is pitching the tired line that capitalism must be reigned in so that people don’t get hurt. That’s like diagnosing the problem with house, finding termites, and then thinking of ways to protect the termites from the house.
Furthermore, Brooks cites a “flood of easy money” (which, of course, is caused by government) as an example of an exogenous force, and then lists the following “shortcomings” of capitalism: “higher debt, a grossly enlarged financial sector and unsustainable bubbles.” What do any of those things have to do with capitalism? If anything, these are once again a failure of government skewing incentives.
In fact, when the government does its darnedest to make the cost of borrowing money historically low, people would be really stupid not to take advantage of that. We all know that rates fluctuate, and that the cost of money will be more expensive when they go back up. Logically therefore, it only makes sense to borrow when the Fed turns the money spigot on and then to find some sort of an asset to grow that money in. That, of course, is what leads to bubbles as everyone has barrels of money but not as many clear ideas of what makes a good investment. Instead of taking the time to really investigate what opportunities are available, and which ones fit a particular person’s portfolio, the herd mentality takes over and we all tend to keep up with the Jones and Smiths whether that means buying tulip bulbs or a run-down house we intend to flip.
The bottom line, however, is that these sorts of scenarios start with government intervention into the market place. In addition to turning on the money spigot, the federal government was also encouraging lenders to make high-risk loans, and for the Freddie Mac and Fannie Mae to buy them up, securitize them and sell them into the derivatives market. Again, that’s all fine and dandy (until it it all goes to hell), but it has nothing to do with “weaknesses” and “shortcomings” of capitalism, and everything to do with government sticking its big fat honker where it doesn’t belong.
If the free market party doesn’t offer the public an honest appraisal of capitalism’s weaknesses, the public will never trust it to address them.
The “free market party”? Who does he think he’s kidding here? The Republicans haven’t acted like a free market party since … well … it’s been so long I can’t remember.
Moreover, I simply can’t fathom how Brooks thinks a “free market party” would ever be able to reconcile itself to joining hands with Obama on his completely anti-capitalist agenda.
Power will inevitably slide over to those who believe this crisis is a repudiation of global capitalism as a whole.
Earth to Brooks: that’s already happened. Look who the president is for crying out loud, or take the time to read your own newspaper. Each and every day we hear about how the excesses of capitalism caused this crisis, and how the “libertarian” policies of Bush (HA!) have landed us in this awful spot. Capitalism didn’t get a trial, Mr. Brooks, it was rounded up, convicted and summarily shot as soon as the latest grand experiment in government do-goodism failed (again).
What is going on with the Charles Freeman nomination, and is it an indicator of a overwhelmed administration losing control? Who, exactly, is in charge there?
Frankly, approaching 45 days into this administration, the transition process, at least as it pertains to critical nominations, has been an unmitigated disaster. But it is the Freeman nomination which begs the question “who is in charge”. Charles Freeman has been nominated for the chairmanship of the National Intelligence Council (NIC), the organization in charge of preparing our most sensitive intelligence estimates.
Obama’s Director of National Intelligence Dennis C. Blair apparently never ran the nomination by the White House. That means Freeman has never been formally vetted. Now this may all fall back on Blair, but you have to wonder what sort of guidance or lack thereof provided him with the belief that this was the way things worked?
More importantly, why did Blair decide Freeman was the man for the job? A former ambassador under George H. W. Bush, to Saudi Arabia and senior envoy to China, Freeman is seen by many as having very serious conflicts of interest which were apparently ignored. Freeman was also a board member the China National Offshore Oil Corp (CNOOC) owned in majority by the Chinese government and other Chinese government agencies. And there are other financial ties which are suspect. Freeman is president of the nonprofit educational organization Middle East Policy Council (MEPC), which paid him $87,000 in 2006, and received at least $1 million from a Saudi prince. You can read about the ramifications of those connections here.
But its not just who Freeman has been connected with, but some of the statements he’s made that make one wonder about his objectivity and, frankly, his moral and ideological foundation. This is a person who remarked that the Chinese government had shown too much “restraint” when putting down the Tiananmen Square protests in 1989. And in testimony before the 9/11 Commission, he advocated the use of a national identity card. After all the wide-spread panic from the left concerning the Bush years and the claim that he was leading us down the path to totalitarianism, this seems like the type of person the left would really find unacceptable for a position.
Then there is the Congressional side of the question. Jennifer Rubin asks:
Does Diane Feinstein think Freeman is an acceptable pick? It is interesting to note how lacking in — what’s the word? ah yes — “oversight” the government is now that Congress and the White House are controlled by the same party. Imagine if George W. Bush had nominated someone whose earnings depended on the largess of the House of Saud or who advocated crushing Chinese dissidents — indeed faster than the Chinese government.
And she further asks, is this the type of person who will give the administration “the “unpoliticized” advice they are looking for?”
Given what we know, I’d say no. However, this nomination is just one more in what can only be characerized as a shambles – Commerce, HHS, Treasury, questions about his housing czar and nominees for other Treasury posts jumping ship – that is the nomination process.
This points to a very inexperienced administration learning on the job in one of the more turbulent times in our history. That is not a good thing, folks, but exactly what was predicted given his lack of a resume. We’ve now seen the result of a campaign based on vacuous slogans. A campaign that was part demonization of the opposition and part beauty pageant. A campaign in which few focused on what the responsibilities of the office entailed and whether the candidate had the qualifications to fulfill them. We’re now “enjoying” what that brings.
UPDATE: Politico reports that Charles Freeman has withdrawn his nomination. Heh … that’s the fastest reaction I’ve ever had to one of my posts.
Warren Buffet on the economy and the effort of the government to “stimulate” it:
While praising efforts by Federal Reserve Chairman Ben Bernanke and others to stimulate the economy, he said the economy “can’t turn around on a dime” and that their efforts could trigger higher inflation once demand rebounds.
“We are certainly doing things that could lead to a lot of inflation,” he said. “In economics there is no free lunch.”
Funny how, when someone like Warren Buffet – who has been a supporter of Obama – says things like ‘trigger inflation’ and ‘no free lunch’, people who were previously playing the denial game (massive spending is necessary and good) suddenly figure there may be a problem. Meanwhile the laws of economics have continued to function despite the denial.
For the most part the press has ignored Buffet’s words and they’ve been downplayed by the administration. But perhaps if those who’ve been in denial are willing to consider Buffet’s warnings, they’ll be open to listening to others. Such as warnings about the double talk that’s been coming out of the Obama administration the past few weeks. For instance:
Confidence (too little) and uncertainty (too much) define this crisis. Obama’s double talk reduces the first and raises the second. He says he’s focused on reviving the economy, but he’s also using the crisis to advance an ambitious long-term agenda. The two sometimes collide. The $787 billion “stimulus” is weaker than necessary, because almost $200 billion for extended projects (high-speed rail, computerized medical records) take effect after 2010. When Congress debates Obama’s sweeping health care and energy proposals, industries, regions and governmental philosophies will clash. Will this improve confidence? Reduce uncertainty?
A prudent president would have made a “tough choice” — concentrated on the economy; deferred his more contentious agenda.
Instead he’s decided he’s not going to let a “good crisis” go to waste and pursue his very expensive agenda which has nothing to do with the economic crisis (or alleviating it). All the while he preaches about crisis, catastrophe, sacrifice, tightening belts and doing with less even as he plans to expand government beyond anything we’ve ever seen.
It is an amazing performance.
Yesterday on the podcast, we talked about Pres. Obama’s attitude towards certain aspects of his presidential responsibilities. Apropos of that discussion, he is receiving some criticism for his indifference to the markets.
Some Wall Street economists think President Obama could have voiced some sympathy about the plight of frightened shareholders when he compared the stock market’s plunge to an election tracking poll that “bobs up and down, day to day.”
They worry that the president is underestimating the important role the stock market plays in the economy’s performance, and that the markets’ precipitous slide is actually a vote of no confidence in the administration’s handling of the economy. There’s also a suspicion that Mr. Obama and his advisers think only wealthy people own stocks.
“There is some of that feeling that rich people are the ones who have stocks. He does have somewhat of that feeling. But you’ve got to remember that most people who own stocks aren’t rich,” said David Wyss, chief economist at Standard & Poor’s, the influential Wall Street financial research and forecasting firm…
…Mr. Wyss and some of his colleagues on Wall Street – where investors have lost trillions of dollars in savings and the market is not so much bobbing as dropping straight down – think Mr. Obama could have shown more concern for the markets, which represent the economy and signal its future direction.
During Mr. Bush’s tenure, there was constant criticism that he was “intellectually incurious”, e.g., he showed a lack of interest in the portions of his job he wasn’t required to be engaged in on a regular basis. I wouldn’t dispute those criticisms, of course, but it seems to be a trait that Pres. Obama shares with his predecessor.
Pres. Obama appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.At the moment, we’re in the midst of an economic crisis–and I use the word intentionally–that stems from a credit bubble collapse. The stock market is a predictor of future earnings and profitability for private sector firms. As such, it tells you things about the expectations investors (which at this point includes more than half of the population) have about the future income that their investments will produce. What the collapse in the stock market tells us is that investors are voting with their money that future earnings will be substantially lower, meaning that firms all across the country will be less profitable.
What happens on a day-to-day basis, of course, may be subject to a variety of market whims and fancies, but long-term trends do indicate the direction of the economy. The market is a leading indicator. So when there are several straight weeks of decline in stock prices, the market is telling us something.
This seems not to be a reality that the president comprehends.
Instead, the president’s main focus seems to be on health care, green jobs, more policemen and prosecutors, and the like. All of which may be wonderful things, and none of which will happen if the economy implodes. To the extent the current crisis forces him to concentrate on economic policy, he appears to resent it.
Similarly, the president has made missteps in foreign policy this week. The Obama Administration apparently attempted to sell our Eastern European allies down the river by offering to shut them out of missile defense if the Russians cooperate on nuclear non-proliferation in Iran–until they got caught out on it. That was a major misstep.It was quickly followed by two minor missteps.
First was Sec. Clinton presenting the Russian foreign minister with a button which was supposed to say, in Russian, “Reset”, to symbolize the new engagement with the world the Obama Administration was supposed to bring about. What the button actually said was “overcharge” in Russian. On top of this, it’s generally a bad idea, symbolically, to present the Russians with a button to push of any sort, considering that the major foreign policy goal of the last half of the 20th century was to prevent the Russians from pushing “the button”.
Second was the treatment of Gordon Brown, the prime minister of the UK, during his visit. Rather than pulling out all the stops to showcase the visit of the head of government of what, by nearly any measure, is the United States’ most important ally, Mr. Obama treated it as if the Deputy Agriculture Minister of Azerbaijan had showed up on the White House’s doorstep. In what may be a first in my lifetime, the various press organs in Britain, from the commies at The
Spectator Observer, to the staid tories of The Times of London all agreed that Pres. Obama’s treatment of Mr. Brown amounted to an egregious snub of the United Kingdom.
In addition to the above, one has to note the retention of Sec. gates at the DoD, along with the retention of the great majority of the Bush Administration’s positions on executive privilege and the prosecution of the Global War on Terror.
What all of these things add up to is a picture of a president who is essentially uninterested in military policy, or foreign policy, or, really, economic policy, and who in effect simply ignores them to the extent he is able, and delegates their operation to his subordinates. What he cares about is government, and its ability to intervene in the marketplace, and to provide goods and services. It is in those areas where his interest and attention actually lie, and the remainder of the executive branch can, as far as he’s concerned, operate on auto-pilot.
Take all of the above together, and it appears to present an emerging picture of a man who is truly intellectually incurious, and who wishes to ignore, to the extent possible, those aspects of the president’s job that he doesn’t find personally appealing.
Sadly, he appears to be fascinated by aspects of politics such as “green jobs” and health care that aren’t actually part of the president’s core portfolio, while being uninterested in the foreign and military policies that are essential parts of the president’s purview.
It is time to get real about what the promised cap-and-trade tax means to the average American.
Politicians love cap and trade because they can claim to be taxing “polluters,” not workers. Hardly. Once the government creates a scarce new commodity — in this case the right to emit carbon — and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag — now Mr. Obama’s budget director — told Congress last year that “Those price increases are essential to the success of a cap-and-trade program.”
Essentially Congress will be creating a new commodity literally out of thin air. It will only create a certain amount of that commodity and so create instant scarcity. As we all know, scarcity drives up prices. The next year, the plan is to remove a portion of the created commodity from the market creating even more scarcity and driving prices for the commodity even higher.
Imagine steel as the commodity. Imagine steel prices going through the roof. Do you suppose they might effect the price of, say, automobiles? Metal buildings? The price of building a bridge or sky scraper?
So who, in the final analysis, is going to end up paying for this increase in steel prices? Why the final consumer, of course. Naturally, with steel, in some cases you can choose to consume (buy a new car, rent an office or approve the bridge) or not consume. However, with the CO2 tax on all industry, to include manufacturing, service, transportation and energy, you have little choice in the matter of consumption. You will be picking up the tab for this.
That brings us full circle to the promised tax cut for 95% of America and my promise that what government gives with one hand it takes with another, making the tax cut illusory at best:
Hit hardest would be the “95% of working families” Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat “unless you use energy.” Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.
After all the caterwalling the left does about “progressive taxation” they are about to implement the most regressive tax I can imagine. And as I’ve pointed out, the tax is pervasive, touching just about all aspects of life. Food prices will rise. Energy prices will go through the roof.
The Congressional Budget Office — Mr. Orszag’s former roost — estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That’s about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).
Of course there is talk of subsidizing those at the lower end of the economic ladder so the impact of rising prices is lessened. Naturally that also negates the impact of the cap-and-trade system. In the end, your tax dollars subsidze the system while increased prices are passed along by so-called polluters. As the price of permits rise over the years, permit holders pay the increasing cost, pass it along and you again subsidize it. The rich can afford it, the poor will be subsidized, so who will get squeezed? Why that middle class that Obama and Biden are so concerned with.
Economically, estimates are that we’re going to have a miserable year in ’09 and possibly ’10. But we may begin to see a recovery really start to take hold in ’11, just in time for the 2012 presidential election. The smart politicians in Washington plan to delay cap-and-trade implementation until 2012. The reason should be obvious. If cap-and-trade has the expected impact on the economy, we could very well see the recovery stall and head back into recession. But politically the timing would be perfect. The mirage of recovery would be just enough to keep the current administration in power for another 4 years, before the economy wrecker of cap-and-trade begins to do its work.
The NYT’s White House reporters got an exclusive interview with Pres. Obama, and one of the pressing questions on their minds was what his ideology is. They asked if, given his spending priorities, he is a socialist, to which he said no, and when they asked if he was a “liberal” or a “progressive” or any other one-word answer, he declined to comment. I can understand him saying that.
But then, after the interview, the president called the reporters back, like he’d thought up a really good zinger after the fact:
It was hard for me to believe you were entirely serious about that socialist question. I did think it might be useful to point out that it wasn’t under me that we started buying a whole bunch of shares of banks. It wasn’t on my watch. And it wasn’t on my watch that we passed a massive new entitlement – the prescription drug plan – without a source of funding. And so I think it’s important just to note when you start hearing folks thro[w] these words around that we’ve actually been operating in a way that is entirely consistent with free-market principles and that some of the same folks who are throwing the word ‘socialist’ around can’t say the same.
Q. So who[se] watch are we talking about here?
A. [*Chuckle*] Well, I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system. And the thing I constantly try to emphasize to people is that if, coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system. And the fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preferences, but an indication of the degree to which lax regulation and extravagant risk-taking has precipitated a crisis.
This is bittersweet, because on the one hand, he clears up any misconception that Bush was effectively conservative (or as John Kerry claimed, extreme libertarian). He says, to his credit, that buying up shares of banks and passing a massive new entitlement (or at least one financed by borrowing) are inconsistent with free-market principles.
I like how Obama says that the financial bailout wasn’t on his watch, when he voted for it as a Senator. But he’s right about Bush. With Obama’s help, a Republican president did dump mountains of wealth into the thermal boreholes of the most heavily regulated sector of the economy–that’s the financial sector, dear reader, although health care is way up there. And afterward, Bush was frank enough to admit that he had “abandoned free-market principles,” although he had the monumental cheek to say he had done so “to save the free-market system.”
But on the other hand, Obama claims that his team’s been operating in a way that is “entirely consistent with free-market principles“! I feel like launching into one of those “Really!?!” segments from SNL, only less funny and more desperate.
Really, Mr. President? And you’re not shoveling piles of taxpayer money into the financial system? You’re not planning any massive expansions of entitlement spending? Really? And you’re going to come up with a source of funding for all of this? Without taxing anyone but the top two five percent? Really.
Really, Mr. President, all you’ve talked about since this crisis started is how everyone in the private sector needs a regulatory cavity search deep enough to do a ventriloquist act. As if what we really need is more Sarbanes-Oxley, SEC and FASB rule changes – because it was our lax regulation that all those businesses ran overseas to escape.
And if I’m putting together a line-up of who caused the “extravagant risk-taking” like the massive overborrowing that inflated the residential real estate bubble, shouldn’t my first suspects be Fannie & Freddie, the Fed and government subsidies?
Your response to this crisis is to borrow more money to subsidize energy, public transportation, public education and state-mandated health care, and really, isn’t that what the free market is all about? Thanks for the assurances that you’re not in favor of bigger government.
Your budget, the stimulus, that second stimulus you hinted at, and rescuing all those giant institutions, some of them for the second and third time: these are all entirely consistent with free-market principles? I mean, really.
Someone help me out. Exactly which free-market principles has the president adhered to, either in his campaign promises or in his actions in office? Tell me why Obama is not mistaken or lying.
Or, perhaps, “all of the above”. From the UK Telegraph:
Sources close to the White House say Mr Obama and his staff have been “overwhelmed” by the economic meltdown and have voiced concerns that the new president is not getting enough rest.
British officials, meanwhile, admit that the White House and US State Department staff were utterly bemused by complaints that the Prime Minister should have been granted full-blown press conference and a formal dinner, as has been customary. They concede that Obama aides seemed unfamiliar with the expectations that surround a major visit by a British prime minister.
But Washington figures with access to Mr Obama’s inner circle explained the slight by saying that those high up in the administration have had little time to deal with international matters, let alone the diplomatic niceties of the special relationship.
Allies of Mr Obama say his weary appearance in the Oval Office with Mr Brown illustrates the strain he is now under, and the president’s surprise at the sheer volume of business that crosses his desk.
A well-connected Washington figure, who is close to members of Mr Obama’s inner circle, expressed concern that Mr Obama had failed so far to “even fake an interest in foreign policy”.
And here we were led to believe Mr. Obama was this cool, multitasker under full control and able to handle everything the job entailed.
That’s what we were led to believe.
Some of us, however, said that of all the jobs on the planet this wasn’t the one for OJT. This isn’t a job where one aspect of the duties can be ignored to concentrate on others.
Guess which group looks more prescient at the moment?
Apparently Timothy Geithner isn’t the financial “rock star” he was touted to be if his handling of the Asian crisis 10 years ago is any indication.
While Obama may have “inherited” the financial problems, the bear market is all his.
Speaking of lay-offs, this isn’t going to make our jet jocks feel very secure.
The new slogan of the Democrats – never let a good crisis go to waste. So this is a “good” crisis?
Take a look at this page and tell me where are the promised tax money from rich folks is going to come from.
If you don’t believe government is contemplating some pretty heavy care rationing when and if they get control, read this little beauty carefully.
Even George McGovern finds the pending card check legislation desired by unions to be “fundamentally wrong” and undemocratic.
Grey wolves “delisted” from endangered species list.
No time for Gordon Brown, but plenty of time for Brad Pitt. Wonder if Pitt got a 25 volume DVD set too?
Is Obama preparing the way for a massive defense spending cut?
Even Paul Krugman is getting a little antsy about the apparent lack of focus of the Obama administration on the financial crisis.
It appears Hugo Chavez recognizes a kindred spirit when he sees one.
The Senate is one vote short of passing the omnibus spending bill with 9,000 earmarks. All I wonder is which Republican will cave first?
Some specifics about the record job losses:
Hiring last month in goods-producing industries fell by 276,000. Within this group, manufacturing firms cut 168,000 jobs bringing the total since the recession began to 1.3 million.
Construction employment was down 104,000 last month. The unemployment rate in that sector is now 21.4%, almost double where it was this time last year.
Service-sector employment tumbled 375,000. Business and professional services companies shed 180,000 jobs, the fourth-straight six-figure loss, and financial-sector payrolls were down 44,000.
Retail trade cut almost 40,000 jobs, while leisure and hospitality businesses shed 33,000 as households curtail nonessential spending.
Temporary employment, a leading indicator of future job prospects, fell by almost 80,000.
So there, in a nutshell, is the status of the productive sector of the economy – the sector that produces wealth, jobs and growth. The sector that should be the focus of any recovery plans and stimulus money.
Instead, what is the President talking about in Ohio, as he panders in the buckle of the rust belt (via email transcript)?
Today I’m pleased to announce that Attorney General Eric Holder and the Department of Justice are making available $2 billion in justice assistance grants from the recovery act. (Applause.) That’s funding that will help communities throughout America keep their neighborhoods safer, with more cops, more prosecutors, more probation officers, more radios and equipment, more help for crime victims, and more crime prevention programs for youth.
Cities and states can apply for these funds right away, and as soon as those applications are received, the Justice Department will start getting the money out the door within 15 days. In Savannah, Georgia, the police department would use this funding to hire more crime and intelligence analysts and put more cops on the beat protecting our schools. In Long Beach, California, it will be able to help fund 17,000 hours of overtime for law enforcement officials who are needed in high-crime areas.
West Haven, Connecticut, will be able to restore crime prevention programs that were cut even though they improved the quality of life in the city’s most troubled neighborhoods. And the state of Iowa will be able to rehire drug enforcement officers and restart drug prevention programs that have been critical in fighting the crime and violence that plagues too many cities and too many towns.
So the list goes on and on. From Maine to San Francisco, from Colorado to New Jersey, these grants will put Americans to work doing the work necessary to keep America safe. They’ll be directed only towards worthy programs that have been carefully planned and proven to work. And Vice President Biden and I will be holding every state and community accountable for the tax dollars they spend.
More cops, more prosecutors, more parole officers.
Private sector jobs? Nada.
Now I understand we need all of those people he talks about. But they won’t help one bit in creating new wealth, new jobs or new opportunities for both, will they? They’re a number Obama can point too when he tries to sell is jobs “saved or created” nonsense in a few years. But as far as a stimulus to the economy – huh uh. What they are, however, are precisely what is expected from a big government liberal – government jobs.
As the WSJ further informs us after giving us the bad news about the productive sector of the economy above, “the government added 9,000 jobs.”
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.