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Subject(s): Energy policy and economic/monetary policy. A great twofer.
Dale makes an incredibly important point about investment below – investors aren’t going to commit their money to industries which are being manipulated by government for political goals and payoffs.
And, the Wall Street Journal makes a similar argument about corporate taxation and the Obama administration’s apparent plan to compound the problem he hopes to “deincentivize” by driving both investors and US companies off shore..
The energy picture is no rosier. Because there is no comprehensive and clear-cut, long-term energy plan from government, and because it is clear to many that the present administration’s plans for energy involve achieving political goals dictated by government vs. a straight market based plan which would see decentralized signals and decisions determine the energy future, investors are sitting on the sidelines. As Sen. Murkowski said, too many in national government today see the energy sector, and especially the oil and gas industry, as an “ATM to pay for other programs”.
When government is so deeply involved in picking winners and losers, investors are not going to invest. Especially given the example of the car and financial industries.
You can guess what that means in terms of economic recovery, not to mention economic growth. Investment is the engine of economic growth. Without it, nothing sustainable happens. Government can make all the make-work jobs in the world, but until investors commit to the economy, we only mark time economically speaking. If anything government should create a climate that provides incentives for private investors – low taxes, favorable investment rules, etc. to encourage investors to risk their money here in the US.
Instead, we have at least three critical areas where government intrusion and manipulation is having exactly the opposite effect.
Michael’s post immediately below deserves to be addressed in some more detail. Not only is the TARP program pernicious to the banking and financial sector, but it’s implications go much deeper than that, and corrupt the rest of the economy as well. And most importantly, this is only the beginning.
The corruption expresses itself in a number of ways. Take a look at the GM/Chrysler situation. In both cases, the UAW emerge as the clear winners in the bankruptcy proceedings. In the case of GM, bondholders with $27 billion in bonds are supposed to accept 10% of the company’s equity, while the UAW’s retirement fund, which holds $10 billion in bonds, is supposed to receive 40%, with the Government taking the remainder of the equity. In what possible way is this supportable?
Likewise, in the Chrysler bailout, the UAW will receive 55% of the equity, while Chrysler’s bondholders receive 30 cents on the dollar for their $7 billion investment.
OF course, Chryslers bondholders are balking at this, throwing the compnay into banklruptcy court. Not that that will save them. Why? TARP. As Thomas Cooley explains:
Chrysler’s dissident lenders have on their side the “absolute priority” bankruptcy rule, which holds that value must be distributed according to the legal priorities of the stakeholders.
Unfortunately, the bankruptcy code also holds that the absolute priority rule can be modified if a two-thirds majority can convince the court that it makes legal or business sense. Two-thirds of the lenders can force the holdouts to go along with them in a procedure called a cram-down.
That is exactly what is likely to happen. Citi, JP Morgan Chase, Goldman Sachs and Morgan Stanley, all major recipients of TARP Funds, all deep in the pocket of the Treasury, agreed to the administration’s plan.
So, the government, holding TARP over the heads of the banks, can now abrogate the generally used bankruptcy rules, and force through a sweetheart deal for a favored political client, the UAW. But, in so doing, they enlarge the damage to the country’s economy by sounding a warning that government funds are dangerous because the government’s first priority is to re-write the rules to reward their special friends. The uncertaintly that creates keeps investors on the sidelines.
Many investors are sitting on the sidelines, as is much money. Why? Because it is impossible to know what the rules of the game are. And that’s because the administration and the Congress keep changing the rules in capricious ways in pursuit of larger political objectives.
Megan McArdle make some of the same points, highlighting the danger inherent in such an approach by the government.
Countries that use their banking systems this way don’t get good results. If you’re a fairly uncorrupt developed country, you get slower growth and bloated “critical” sectors that are usually more critical in providing campaign support, lavishly remunerated make-work jobs, and photo ops, than any products the public actually wants. Then, if something like Japan happens, you have a twenty-year “lost decade” while everyone pretends as hard as hard can be that everything is all right, in the sincere but misguided believe [sic] that wishing hard enough will make it so.
One wonders if Ms. McArdle now thinks back on her support of Mr. Obama during the last election as “sincere but misguided”. But I digress.
IN any event, the government has moved full steam ahead with the approach Ms. McArdle decries. And it will continue to do so. How do we know this? because of the way the Chrysler bankruptcy is being handled.
I heard repeatedly from progressives, in the run-up to the bankruptcy case, that the holdouts were unreasonably holding out for a trivial improvement–about 500 million dollars. But if it was so trivial, why didn’t the government just put the extra money in, rather than jeopardizing confidence in the bankruptcy system–and the creditworthiness of a large swathe of unionized firms? $500 million is about the price of one cup of coffee per American, a trivial sum relative to the overall budget. This move has shown potential partners that government funds are dangerous, and potential lenders that union firms are risky bets; both have probably cost American citizens more than they saved. So why did the government risk so much for so little gain?
You know the answer, don’t you? Because they’re planning to do it again.
And to the extent they keep doing so, and keeping the financial sector in line via the TARP funds, investors will increasingly keep their money out of the game. Why should they do otherwise? Any investment in any entity with any relationship to TARP, either directly, or via creditors, is a target for the government to re-write the rules of investment and bondh0lding to ensure their special friends get a nice cut of the action.
True, it’s hard to have much sympathy for either GM or Chrysler. But the issue now goes far beyond them. Cooley, again:
There is at least some poetic justice in this outcome. The unions, whose years of work rules, and pension and health care deals helped sink the company, will have to eat their own cooking from now on. But their future success needs not only labor but capital.
Why would private capital get involved when the rules of the game are so capricious? No one would take that gamble when it is clear that, in dealing with the government, private capital will always take a back seat to politically powerful entities.
And that is the larger worry that current policy has neglected. Firms and markets can function quite well within a framework of rules. Indeed, rules are good for the orderly conduct of business. But when rules get imposed or dispensed with willy-nilly in the interests of politics, it is very dangerous. We have should have learned this lesson long ago.
But, apparently, we didn’t. Don’t worry, though. I’m fairly certain we’ll re-learn it in due course.
What really offends me the most in all this is not that the government is acting in the interest of favored clients, although that’s extraordinarily offensive. That’s what governments do.
I think the thing that offends me the most is the sheer stupidity of the thing.
Does it strike anyone else as funny that TARP is a poor anagram for “trap”? If Shakespeare had written this play the name would have been much more clever, of course, but I think he would delight in the barely concealed irony of the federal government drawing banks into its lair with the pretense of saving their hides, only to use the money intended to do so as the means of yoking the industry. I’ll bet the banks who took TARP funds don’t find it so humorous.
Since last October when Hank Paulsen forced nine of the largest banks to take an initial injection of $125 billion in TARP funds (among other bullying), the federal government has committed about $12.2 trillion dollars to bailouts and spent about $2.5 trillion on such efforts (er, among other, other bullying). Aside from an increasing assertion of control over the financial and automotive sectors of our economy (among other, other, other bullying), there is very little to show for all this money. Which leaves the rather stark impression that government control was the goal all along — i.e. the method within the madness.
I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn’t much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street’s black hole. So why no cheering as the cash comes back?
My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ‘em what to do. Control. Direct. Command.
Here’s a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons [ed.: That's a highly charitable argument]. It wanted to recapitalize the banks to halt a financial panic.
Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.
Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can’t a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can’t special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit — until now.
Despite the government’s bullying, it is difficult to feel much pity for the institutions who accepted TARP funds. Surely they must have at least suspected an iron hand inside that velvet glove attempting to feed them. However, if they truly don’t need the money, and have the means to pay it back, then onerous seems too slight a word to express how gripping the government’s control has become:
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government’s desire not to have banks abandon the bailout program if they are not financially prepared to do so.
The government’s desire? I don’t recall exactly where that is accounted for in the Constitution. Is it buried somewhere in the penumbras and emanations of the commerce clause? Clearly the “government’s desire” must have some force of law that it can unilaterally decide to allow banks to sink or swim on their own. Otherwise, such desire is wholly irrelevant.
Nonetheless, banks did take the money, and so the government gets to call the tune. Institutions who would have collapsed absent the bailout have little to grouse about in such circumstances. But other firms, who didn’t need the money in the first place, rightfully bristled at the demands being placed upon them and the opprobrium casually tossed their way by the government.
Kim Price’s Gastonia bank accepted $20 million from the Troubled Asset Relief Program to help keep credit flowing as the economy faltered.
Now the Citizens South Banking Corp. chief executive and other community bankers feel that Congress is treating them like villains.
Proposed new TARP rules that could limit bankers’ pay have upset many bank executives here. And the congressional effort has prompted some banks in other states to give the money back.
TCF Financial Corp, a Minnesota lender, said it repaid a $361.2 million capital infusion that it took from the U.S. government’s bank bailout program, becoming the largest recipient to repay its funds.
Regulators, banks and investors once viewed participation in the program as a positive, figuring that it would help healthy banks lend more and perhaps buy struggling rivals.
But participation is now often viewed as an albatross, subjecting recipients to restrictions on such things as executive pay and dividends.
Investors now consider some banks that hold onto their aid as being too weak to return it. Large banks such as Goldman Sachs Group Inc ( GS – news – people ) and JPMorgan Chase ( JPM – news – people ) & Co have said they want to repay their aid soon.
TCF Chief Executive William Cooper this week said holding TARP money put the bank at a “competitive disadvantage.”
He said repaying the aid and eliminating the associated dividend payments will boost earnings by more than 14 cents per share annually.
By inducing banks to take TARP money, whether through tactics or intimidation, the government has neatly cornered the capital flow of the country. Much like Hamlet surreptitiously forced his uncle to publicly face scorn for his act of regicide (by having performed the “Murder of Gonzago,” aka the “Mouse-Trap”), the government has successfully lured failing banks into the public square for ridicule. Whereas Hamlet sought to elicit a sign of guilt in order to justify his vengeance, however, the government seems intent on effusing guilt throughout the banking industry so as to justify its controlling moves. By tainting the public view of the financial sector, the government seeks to undermine public confidence and build a chorus calling for its heavy-handed involvement. As mentioned above, protestations by the beggars for such action protest too much, methinks, but those who truly have no need of the interference have much cause to cry foul.
Hamlet ends with nearly every character dead, and the country being turned over to its greatest enemy. Unfortunately, the financial sector seems destined for a similar result as the government has made clear it will not allow certain institutions to fail, and is callously indifferent to fate of the unchosen. No matter how well those banks who managed to avoid TARP altogether do, the government is now the major mover in game, and the only one with the power to force its will on all the other players. It can, and will, pass laws that favor the winners its chosen, thus leaving the non-assisted banks out in the cold. In the end, firms who conform to market forces (i.e. respond to the desires of its customers), will be supplanted by those which conform to will of the government’s agenda. The trap was set, the mice did enter, and thus their fates were sealed.
There’s some interesting stuff out there to read about the Chrysler bankruptcy, like people asking “why wasn’t this done in the beginning”?
Simple answer – in the beginning there was no way to secure the UAW a majority stake in the company. Now, as Felix Salmon points out, that’s been accomplished:
The broad outlines of a deal are already clear: Fiat will take a 35% stake in the company and manage it; the UAW will have a 55% stake; and all the government’s TARP funds will be converted into a 10% stake. Present-day creditors do not get equity but rather get cash; the sticking point is exactly how much cash they will get. And of course present-day shareholders — Cerberus and Daimler — are wiped out, and top management will be replaced.
Of course the reason Chrysler is headed into bankruptcy is because all of its bondholders weren’t satisfied with the deal offered through taxpayers money. As you might imagine, Think Progress has the “progressive” spin on the situation:
As Bloomberg reported, “Obama’s team had first offered secured lenders $2 billion for their $6.9 billion in loans, and then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion, and Obama’s patience ran out.” Steven Pearlstein put these numbers into perspective:
What you need to know about these vultures is that their idea of fairness is throwing 100,000 people out of work and denying retirees their pensions and their health benefits just so they can liquidate the company and maybe squeeze an extra 15 cents on the dollar from their Chrysler debt. Of course, to get that extra 15 cents, the hedge funds would probably have to fork over a penny or two to pay the army of $700-an-hour lawyers needed to spend two years working it through the bankruptcy process.
The greed factor here is really appalling, but bad intentions can sometimes produce a good result.
The greed factor here certainly is appalling, but not on the part of the group Think Progress would like us to believe is the problem. I mean, how dare secured lenders ask for more money than a paltry 30% of what they lent Chrysler? In the new world of what’s fair, apparently asking for 30% is unfair and greedy. And frankly with an administration which has tossed trillions around like they were beads at Mardi Gras, it seems that somehow $250 million more was just a “bridge too far” when it came to keeping the deal together.
More importantly, what in the hell is the President of the United States doing involved in this sort of process to begin with? Oh, wait, the UAW gets 55% ownership?
All of this is necessary but not sufficient for Chrysler to have any hope of a long-term future. One of the more interesting things going forward will be how Chrysler manages to turn itself into a smaller, nimbler, change-oriented company while being majority owned by the UAW — which is nobody’s idea of a change agent. In general, if you need a dose of creative destruction, big unions are not the place to look.
You think? Another wonderful deal put together by the folks who want to run your health care. And yes, I know this isn’t perfectly analogous to the British Leyland situation, but it certainly has some striking similarities. A labor union will most likely have to decide between it’s previous decades of focus and producing cars that people want and can afford. And government involved in the deal up to its armpits. In case you missed it, the government will appoint four of the nine member board and the Canadian government will appoint one. Fiat is essentially a management entity with only 3 on the board and a 35% stake. And while the UAW will only have one seat, it will be a seat representing 55% ownership.
Yeah, nothing can go wrong with that.
Remember: billions in earmarks are insignificant but, millions in bonuses are outrageous; “bi-partisan” actually means “one-party rule”; and now “bankruptcy” means “strong.” From Jake Tapper’s Twitter feed:
POTUS says bankruptcy “not a sign of weakness”…
Can’t you just see the White House Press Corps (excepting Tapper, of course) looking like the bunch of lapdogs that they are in response to that statement?
MORE: Tom Maguire is less than impressed with the President’s reasoning about shared sacrifice with respect to the Chrysler bankruptcy:
Uh, hello, how about the US taxpayer? Any props, exhortations, or acknowledgment of their role here? Sorry, MY role?
The Congress – yeah, they have to sacrifice an endless stream of donations from the UAW.
Or so the saying goes – but in this case it may have a ring of truth to it.
Democrats have been quick to dismiss the Tea Parties which were held in hundreds of locations throughout the country as nothing more than a few disgruntled right-wingers who are sore losers. But instead, they may be the most visible part of a much larger movement that is saying “enough is enough”. And nothing may demonstrate that more than the upcoming special election in California.
Voters there are apparently tired of the legislature not doing its job, and see the 6 ballot measures as the legislature trying to pass the buck instead of doing their job. Consequently, we find a broad consensus that crosses party lines, in opposition to most of the ballot measures proposed. The one most likely to pass, interestingly, has to do with refusing legislators a raise if the state’s budget is in a deficit. In California that means whatever they’re making now is likely to be their pay from now on. Of course, I’d love to see the same sort of measure passed for the Congress of the United States.
To demonstrate the point of citizen bi-partisanship on this are a Republican and Democrat speaking about the upcoming vote:
Voter Barbara Dale, a Republican from Red Bluff, said she will be happy to vote in the special election because she is convinced that lawmakers can’t do their job themselves.
“I don’t like a lot of the things that they’re doing,” said Dale, who plans to vote “no” on Proposition 1A, which seeks to impose state spending restrictions but would trigger $16 billion in extended tax hikes.
“They’re just pushing things through,” Dale complained of lawmakers. “They’re spending too much money, they’re raising taxes, and they’re chasing businesses out of California.”
But Dale particularly wants to vote “yes” on Proposition 1F – the measure to deny elected officials pay raises when there is a state general fund deficit.
So does Democrat Vincent Anderson, an American River College student in Sacramento County.
“Why would we pay them more money when it seems that they’re never doing their job?” Anderson asked. “Their job is to run the state.”
Anderson, who opposes most of the budget reform measures, said he is offended the initiatives are even on the ballot.
“They’re just passing the buck,” he said. “California has been in debt for a while. Why is this (special election) so important now?”
In fact, a large majority of voters polled are not at all happy with the direction of their state’s government:
The poll found a greater proportion of Republicans opposed to the measures than Democrats. More than three-fifths of Republicans oppose the fund shifts proposed in Propositions 1D and 1E, even though both ideas originated with GOP members of the Legislature.
But healthy majorities of both parties – 72 percent overall – answered “yes” when pollsters asked if voting down the measures “would send a message to the governor and the state Legislature that voters are tired of more government spending and higher taxes.”
Now anyone that doesn’t understand that it isn’t just “state government” which has embarked on a program of “more government spending and higher taxes” isn’t paying attention. Thus the “Tea Parties”. If what is going on in California is typical of the developing mood around the country, and I think it is, then Democrats waive off the Tea Parties at their own electoral peril. Instead of Tea Parties being gatherings of a “few hundred” disgruntled “right-wingers” who are “sore losers”, they may just be the tip of a gigantic ice berg of discontent which will begin manifesting itself at the polls as it appears it will in California.
As an aside – that doesn’t mean the GOP is the winner in all of this. I think most of the Tea Parties demonstrated that the people who attended are just as fed up with Republicans as they are with Democrats.
Down economy? Tax revenues in the toilet? Don’t worry Bunky, government will always find a way to keep it’s revenue stream full:
The days of buying online to avoid paying sales taxes may soon be over.
A bill is expected to be introduced to Congress this week that would force retailers like eBay and Amazon.com to start collecting sales taxes on behalf of states from people who shop online or through mail order.
Of course if you know anything about government you also know this was inevitable. However, it is lines like the following which make my blood boil:
“This would be fiscal relief for the states that wouldn’t require any money from the federal government,” said Neal Osten, a senior policy analyst with the National Conference of State Legislatures, which is drafting the bill.
Osten pointed to a recent study that said state sales tax collections fell to their lowest levels in 50 years at the end of 2008.
My earnings are not there to be “fiscal relief” for profligate states who find themselves with budget shortfalls due to poor budgetary practices. Osten seems to think this is some sort of money tree he’s discovered. More importantly, he seems to view the money as rightfully the government’s, not that of the wage earner. And notice, it is a lobbying group with a vested interest in the outcome writing the legislation. What happened to that promise about “no lobbyists” the new administration made? Special interest democracy is alive and well.
Of course a recession is a great time to pass tax legislation like this – why not cool another segment of the economy by giving priority to government tax collections over spurring economic growth?
The more I observe these lunatics and consider their blinkered and ignorant view of the economic world, the less confidence I have that they’ll figure out that the way out of a recession is to cut taxes, not pass new ones.
Kimberley Strassel has a good article in today’s WSJ about what she sees as Democrats overreaching on climate legislation.
For one, they seem to be misreading the public’s support for the radical type legislation that Nancy Pelosi and Henry Waxman favor. Since the recession has hit, people are much less concerned about the environmental impact of certain industries and much more concerned about preserving the jobs they provide.
But it is more than that – the Democratic leadership seems to be misreading the political tea-leaves as well:
To listen to Congressman Jim Matheson is something else. During opening statements, the Utah Democrat detailed 14 big problems he had with the bill, and told me later that if he hadn’t been limited to five minutes, “I might have had more.” Mr. Matheson is one of about 10 moderate committee Democrats who are less than thrilled with the Waxman climate extravaganza, and who may yet stymie one of Barack Obama’s signature issues. If so, the president can thank Democratic liberals, who are engaging in one of their first big cases of overreach.
Not that you couldn’t see this coming even last year, when Speaker Nancy Pelosi engineered her coup against former Energy chairman John Dingell. House greens had been boiling over the Michigan veteran’s cautious approach to climate-legislation. Mr. Dingell’s mistake was understanding that when it comes to energy legislation, the divides aren’t among parties, but among regions. Design a bill that socks it to all those manufacturing, oil-producing, coal-producing, coal-using states, and say goodbye to the very Democrats necessary to pass that bill.
Of course, that’s precisely what the Waxman’s of the party intend to do. As Strassel notes, Pelosi engineered the replacement of Dingell with Waxman precisely to push the more radical agenda.
And 2010 looms:
There’s Mr. Matheson, chair of the Blue Dog energy task force, who has made a political career championing energy diversity and his state’s fossil fuels, and who understands Utah is mostly reliant on coal for its electricity needs. He says he sees several ways this bill could result in a huge “income transfer” from his state to those less fossil-fuel dependent. Indiana Democrat Baron Hill has a similar problem; not only does his district rely on coal, it is home to coal miners. Rick Boucher, who represents the coal-fields of South Virginia, knows the feeling.
Or consider Texas’s Gene Green and Charles Gonzalez, or Louisiana’s Charlie Melancon, oil-patch Dems all, whose home-district refineries would be taxed from every which way by the bill. Mr. Dingell remains protective of his district’s struggling auto workers, which would be further incapacitated by the bill. Pennsylvania’s Mike Doyle won’t easily throw his home-state steel industry over a cliff.
Add in the fact that a number of these Democrats hail from districts that could just as easily be in Republicans’ hands. They aren’t eager to explain to their blue-collar constituents the costs of indulging Mrs. Pelosi’s San Francisco environmentalists. Remember 1993, when President Bill Clinton proposed an energy tax on BTUs? The House swallowed hard and passed the legislation, only to have Senate Democrats kill it; a year later, Newt Gingrich was in charge. With Senate Democrats already backing away from the Obama cap-and-trade plans, at least a few House Dems are reluctant to walk the plank.
Never mind that passage of this bill would most likely retard economic recovery for the foreseeable future, it might also begin to flip the House politically when its consequences are made clear to the public. Waxman and his allies are attempting to poltically arm-twist and bribe enough Democrats to push this through the House, but it apparently faces tough sledding in the Senate, even with a filibuster-proof majority in the offing.
How this ends up is anyone’s guess, but as strange as it sounds, the recession is our best friend in this case. Cap and trade would be disasterous now – not that it wouldn’t be even in a strong economy. And there seems to be building support on both sides to stop it. What you have to hope is that somehow it will then be delayed enough that the mix in Congress changes to the point that the Dem’s radical environmental policy ends up being DOA.
I put economics is [""] for a reason. And that has to do with the fact that there was little about the first 100 days which had much to do with economics and certainly wasn’t economical. Feast your eyes on this. Yes, it’s from the GOP, but “numbers is numbers”, folks, and check out the quote attached to the chart:
Heritage also weighs in with a few trenchant observations:
In his first 100 days, President Obama will have quadrupled the budget deficit he inherited while pledging to cut it in half, which would still leave a deficit double the size it was in January 2009.
Make sure you get that – quadrupled the budget deficit within 100 days. Promised to cut budget deficit in half. Even if he does that, it will still be twice the size of the budget deficit in Jan 2009 when he made the promise. Yup, smoke and mirrors.
The President came into office promising a “net spending cut” then signed the stimulus bill, which will dump $9,400 in new debt on the average American household. Under CBO’s estimate, if some programs become permanent, this would skyrocket to $26,600 per American household.
And we are reminded that there is nothing more permanent than a temporary government program (REA anyone?).
Just to give this all a little more perspective:
In his first 100 days, President Obama proposed a budget that would dump a staggering $9.3 trillion in new debt—$68,000 per household—into the laps of American children. This is more debt than has been accumulated by all previous Presidents in American history combined.
And yeah, for the lefties that includes the “selected but not elected” George W. Bush among all the president’s combined. Or said another way, 44 is spending more than the previous 42 combined (and no I didn’t screw up, Grover Cleveland was president twice at two different times).
So while you see the informationally deprived “celebrating” the “accomplishments” of his first 100 days, don’t forget that those yet to be born aren’t going to be quite as enamored with Obama as the present spendthrifts who think he’s doing such a great job economically.