Thursday, February 26, 2009
Sadly, it's well beyond the grasp of most politicians in Washington, too.
The Washington Dems are trying to blame the whole thing on previous administration, normally a foolproof strategy good for the first couple of years of any new administration. Unfortunately, in this case, such an argument doesn't stand up to even the most cursory analysis. Compared to Obama's spending, Bush was a rank amateur. Actually Bush was a rank amateur in most areas of government, but I digress.
While Dems love to point a finger at the cost of the war in Iraq or the so-called tax breaks for the rich to explain the deficit, Barack Obama has done more damage in two short weeks than Bush did in eight long years. The chart below says it all.
We are in the process of creating an unpayable debt. And inflation is just months away. The complete default of the United States is clearly on the horizon.
How Nancy Pelosi could propose an 8% increase in spending in this recession is beyond all comprehension. That she did it on top of $800 billion in new spending, not so cleverly disguised as a "stimulus package," is stunning. If only anything passed earlier was actually a stimulus, we might have a prayer. It wasn't and we don't.
Just read some of the analysis dominating the nation's newspapers and economic journals.
Reuters reports Obama budget plan forecasts $1.75 trillion deficit. "An eye-popping $1.75 trillion deficit for the 2009 fiscal year is projected in Obama's first budget. That is equal to 12.3 percent of U.S. gross domestic product."
ABC News points out that Obama is planning the largest tax increase in US history: Almost $1 Trillion in New Taxes Over Next 10 yrs, Starting 2011. "President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals."
While the President attempts to aim tax increases toward the highest wage earners, the facts simply prove his oft stated plan cannot possibly raise the needed revenue to offset his massive spending plan. In a detailed analysis, The Wall Street Journal shows that even if Obama taxed this top 2% of wage earners at 100% of income, he would still fall trillions short of the revenue needed. The 2% Illusion shows the complete fallacy of Obama's tax the rich scheme.
"But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion."
Tragically Obama's may well hit the lower and middle classes hardest of all. Since it is simply impossible to tax the rich enough to cover the deficit, hidden taxes on energy that hit the poor the very hardest will make up a huge part of the shortfall.
What Obama's plan does do is tax small business into oblivion. Virtually every small business will be really hurt by Obama's announced tax plan. Instead of helping the economy, these taxes will lead to massive unemployment. What Obama fails to announce is virtually all small businesses fall under his tax increase plans. The ABC Analysis covers the tax increases on business.
In order to sell this insane plan in congress, Dems are designing the fight as Class Warfare. While John Kerry fired the first salvo yesterday, the demonization of the rich and corporations isn't lost on the Associated Press who detail it today's article, Obama plan brings cries of class warfare.
While Democrats are calling the Republicans the "Party of No," a resounding "NO" is exactly what is needed if we are to save our economy and, ultimately, our country. Sadly, it will require Democrats to wake up and show some sense and demand economic realism and restraint from the Democrat leadership and the tragically naive President Obama.
Wednesday, February 25, 2009
Today Kerry introduced a bill to regulate the behavior of companies that received TARP money. Experts say the bill is so vapid and unconstitutional that it could never be enforced and would never stand a court challenge.
Trust me when I tell you Kerry doesn't give a rat's ass. He isn't trying to solve any problem, real or imaginary. He is simply trying to grandstand and get his 15 minutes of fame, by inciting class warfare between those he hopes to keep forever poor and those he can demonize for their success.
Keep in mind that, through marriage, Kerry is one of the wealthiest men on earth. While he wants to demonize a company that has achieved tremendous financial success, earned a fair profit and rewards their employees magnificently, he would never stand for anyone curtailing his right to spend his vast fortune in any way he wanted.
So while Kerry will continue to attend all the Golf Tournaments and Sheryl Crow concerts he desires, he wants to insure your employer won't reward your performance with tickets to a similar venue.
Oh, and coincidentally, Kerry wants to end the very marketing strategies that propelled Northern Trust Corp. to its astonishing success.
Frankly, Northern Trust's annual golf tournament, the Northern Trust Open, at the Riviera Country Club in Pacific Palisades, California. has done more to actually stimulate the economy that the trillion dollar Obama/Pelosi/Reid Stimulus bill will ever do. By the way, for all my golfing fans, the tournament was won by Phil Mickelson.
Hotels were filled and employees were paid with real wages and real jobs. Restaurants were filled to overflowing, rewarding workers, chefs, waiters, waitresses and even dishwashers. Television and sports networks employed hundreds. The flow of cash goes on and on. And not one single penny of taxpayer money was used. Instead millions of dollars of tax revenue was generated for the local, state and national government.
But hell, if tax money had been used, Northern Trust should have been congratulated, not condemned. We wanted banks to use the TARP money to improve the economy, not just sit on the cash.
Northern Trust stated their position with clarity and eloquence:
|"Questions have been raised regarding Northern Trust's sponsorship of the Northern Trust Open, a PGA event that has raised millions of dollars for charities, along with client-focused events. As economies worldwide are attempting to rise above current difficulties, it is important for healthy banks like Northern Trust to continue to invest in our clients and the communities we serve."|
By inciting class warfare, Kerry actually insures that everybody loses. And that is exactly what Kerry wants.
Taking a step back and looking at the scope of his vision for America, I cannot disagree with him on anything. He has my support on every single proposal.
Of course the devil is in the details and those details will take do time to develop. And Obama still runs the risk that Nancy Pelosi will circumvent his vision and replace it with a pale partisan version of her own.
Already there is one rather horrific note to indicate politics as usual will actually hold sway in Washington. Obama "promised" that "next year" there would be "no earmarks in the omnibus spending bill." He cleverly omitted that promise for this year's bill. The Pelosi authored spending bill being introduced tomorrow contains over 8,000 pork laden earmarks, some so stupefyingly wasteful they defy belief.
As I said, the devil is in the details.
Unfortunately, I heard absolutely nothing from Louisiana Governor Bobby Jindal to inspire me. His bizarre partisan pandering seemed small, petty and out of place. He did not represent the Republican Party well. But Jindal was just the sideshow, Obama was the star.
Friday, February 20, 2009
I believe our President is doing everything he can to help the economy and the country. He seems to be working at breakneck speed and with great organization and effort. But his efforts seem to lack optimism or, in the iconic single word symbol of his campaign, "Hope."
Bill Clinton makes exactly the same observation in his interview on ABC NEWS:
|"I like [that President Obama is] trying to educate the American people about the dimensions and scope of this economic crisis," Clinton said. "I just would like him to end by saying that he is hopeful and completely convinced we're gonna come through this."|
"I think you will see some good economic news from the stimulus fairly soon," Clinton said. "I think you'll start to see people express gratitude for getting the unemployment benefits, the tax cuts and the food stamps. And you'll see the money flowing through the economy. Then I think you'll see every state be able to quantify how much better shape they're in, because of the education and health money."
I made the point earlier that a huge part of President Reagan's success in pulling America out of the economic mess at the end of the Carter era was Reagan's electric optimism. We all believed it was "Morning in America."
This doesn't mean you sugar coat the facts. But Obama is now slipping in the polls (down 9 percentage points in one month) and support for his stimulus package has now fallen below 50%. Now there are some very serious problems with the stimulus plan, as I've discussed in several recent posts and will discuss further in the future.
But President Obama can start to improve both his ratings and his efforts by following the advice offered by Clinton, one of the finest communicators in recent times.
Monday, February 16, 2009
Years from now economists and politicians will look back and wonder "How could this possibly happen?" There were no economic conditions that warranted this type of insane deficit spending. The question will be "How could have our elected representatives been stampeded into taking such self destructive action?"
"How were our representatives tricked into doubling the deficit by passing a bill not one of them ever read?"
We are undoubtedly headed into a major depression that will be combined with massive inflation. In two to three short years, once the major tax hikes already written into law take effect (the expiration of the Bush tax cuts), the economy might will totally self destruct.
The packages extremely minor tax cuts (a 13 dollar a month joke, really) will expire after a few months, not that they will help stimulate the economy. But the insane deficit spending will just be ramping up. Much of this spending will create no jobs.
Unemployment will go well into double digits and inflation will follow, basically destroying the working economy.
What can we do now? Well, economists are beginning to speak up. The alarm bells are sounding. Contact your Senators and Congress persons. We will need to return to spending sanity. And we need real tax cuts that will spur permanent private sector jobs. These will not need to be costly.
Fixing this Stimulus Package error, made on the spur of the moment and without any thought or consideration of its impact, will take many years of tough effort to correct.
Friday, February 13, 2009
Compare his slow, deliberate and leaden speeches with the buoyant optimism of Ronald Reagan in his first few days as President. It really was "morning in America" and the public found Reagan's optimism was contagious.
This was President Obama just yesterday, "This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."
Many in the retail sector (where most of my personal contacts work) are really complaining about Obama "talking down" the economy. They feel Obama is not just forecasting the coming depression, he is actually making it much worse.
I have to agree.
This afternoon the House passed the completely partisan Pelosi and Reid Stimulus Package. It is a real shame that President Obama failed to properly oversee and guide this bill. The package will do a lot of things, but it's not going to "stimulate" the economy. This mess of a pork laden goulash of a bill will not help us to recover from the current recession and, frankly, Barack Obama and his advisers know this all too well.
He dare not speak optimistically, because there is not hope on the horizon. Nor was there any change in the bills development.
Nancy Pelosi, the worst elected governmental officer in the entire history of the United States, effectively killed bi-partisanship by all herself. Not one single Republican voted for her rat (err, mouse) infested stimulus bill. And not one should have voted for it. First, it is morally and ethically wrong to vote for a bill that will damage and perhaps destroy the United States. Second, if Pelosi is bound and determined to exclude all Republican ideas and voices from the development of the bill, she deserves no support.
As a Democrat I am repulsed by Pelosi and her heavy handed and light headed power grab. With supporters like Pelosi, President Obama doesn't need enemies.
Barring a much needed miracle, the pseudo stimulus bill will now pass the Senate. But Republicans will put up a good fight.
But there will be no moral victory for the Republicans. When the country is in ruins and unemployment and inflation reach double digits, there will be no joy in saying ,"I told you so."
Barack Obama is our president and he deserves our support and loyalty. He will need to support of every American to cope and cure the damage this bill will do to our country.
Tuesday, February 10, 2009
Watching President Obama and Secretary Geithner and Senate and Representative Leaders mapping out a multi-pronged governmental approach virtually identical to the actions that led to the 1930's Great Depression is genuinely a terrifying experience. I picked a really poor day to stay at home.
The news reports are restrained (read Five Reasons the Markets Don't Like the Bank Bailout)when compared to the discussions I've had with financial experts behind the scenes. The panic is real. And the markets show it.
The government cannot spend their way out of this crisis. In fact, the more the government spends, the deeper and longer the crisis will last. Geithner's signals of future bailouts really terrifies virtually every economist not on the administration's payroll.
Famed investor and global economic analyst Jim Rogers predicts Government Bonds May Be Last Bubble. If he is even partially right, it would mean the collapse of the United States.
Investors will have to short government bonds at some point despite their current attraction, as the amount of debt issued is "staggering" and inflation risks are down the road, Jim Rogers, CEO of Jim Rogers Holdings, told CNBC Tuesday.
"I'm buying gold just because I'm periodically buying gold, because I do expect it to be much higher over the next decade," Rogers said, adding that history has never seen all major central banks printing money "as fast as they can" at the same time.
Rogers is right. We are not going to be able to finance this level of national dept. In effect, the government is merely printing money and massive inflation is absolutely guaranteed. Rogers is wise to signal a move to buy more gold.
I believe we really must defeat the massive inflation package masquerading as a stimulus plan. Once again I suggest you call your Representative and Senator. Tell them to delay or vote against the Stimulus Package. We need Democrats to break with the President and vote with the Republicans. That is damned tough for them to do, but our very future depends on it.
Then we must demand a whole lot more from President Obama and Treasury Secretary Geithner.
Harvard Economist Dr. Robert Barro
The left wing Progressives and Democrat Party partisans have to decided to brand the Republicans who dare to oppose the Stimulus Bill as "do nothings," bankrupt of ideas and devoid of plans. In a coordinated and choreographed attack almost every Democrat blog and commentator is repeating this obviously false mantra. It's a lie of gigantic proportions, though not as gigantic as the pseudo-stimulus package about to muscle its way through Congress.
Rejecting a bad, bad bill is hardly the same as rejecting the need to solve a very real problem. Republicans put forth a good many ideas and plans, not one of which was ever considered, let alone included, by a totally partisan Democrat majority who refused to allow a single Republican to assist in crafting the bill.
I hate to see the majority of liberal bloggers resort to a complete and utter lie to force through a poorly crafted spending and tax rebate package that will ultimately do much more harm than good.
Under this whithering attack it will be even more difficult for Republicans to do what is needed, let alone attract thinking Democrats to their cause. Never-the-less this plan must be rejected by Congress and the planners must return to the drawing bard for a fresh and totally bi-partisan approach. It's not likely to happen.
Rick Moran echos my analysis. In his article THE STIMULUS SHOULD GO BACK TO THE DRAWING BOARD, Moran states,
|The chances of deep sixing the stimulus monstrosity and starting over again are as near to absolute zero as you can get in politics. The reputations of Speaker Pelosi, Harry Reid, and the president himself are on the line and a defeat of the conference report in the senate (still a possibility after the House tries to restore many of the cuts made by the senate), would be very damaging to that triumvirate, especially the president.|
But if ever there were a case where the leaders of the Democratic party should swallow their pride and take the hit on their credibility by tearing up this piece of legislation and starting over, this is it.
Not much of a chance of that happening what with Obama going on national TV tonight and a cloture vote scheduled in the senate tomorrow. So Obama will probably ratchet up the fear mongering to heights not seen since Democrats ran commercials accusing Republicans of wanting to kill poor children and force old people to eat dog food. It is one thing to tell us the truth about our dire economic straits. It is quite another to try and make people believe that only by passing his $900 billion panic panacea will we avoid “catastrophe.”
Friday, February 06, 2009
We are in way too big of a hurry to pass what could be a disastrous bill. Obama and a small but influential part of the media is applying massive pressure to pass the bill today. This simply must not happen. In fact, the entire bill should probably be scrapped.
Many, if not most, economists are really concerned that this massive spending package, the largest in the entire history of the nation, will doom our economy into hyper inflation and ultimate collapse. Even the bi-partisan Congressional Budget Office is screaming at the top of their collective lungs that we are about to make a serious mistake.
I'm afraid no one is listening.
What concerns me most is that Barack Obama seems to be panicking. His lack of experience and lack of knowledge is starting to show. Obama sees this crisis as his 9/11 and he his not handling it well. And it's not 9/11 either. It's a slow burn and everyone needs to calm down, study the extent and nature of the fire and then plan a coordinated effort to fight it.
Barack Obama is our President and he deserves all of our help and support. But part of that support and help is the necessity that we help our Senators and Representatives to slow down and really consider the impact of this massive spending bill.
This is not play money. We will borrow it in order to make these expenditures and it will add to our national debt.
The efforts of the bi-partisan groups of Senators now trying to forge a package is a good start. But even more analysis needs to be done before we mortgage our future.
"Desperate always reaps stupid." Dave Ramsey
I urge you to call your Senator today (the switchboards are very busy) and urge a delay, or at least a reduction, of the Stimulus Package. Every bit of contact information you might ever need to reach your Senator is here. I apologize for this "conservative" link, but it is the best and most comprehensive list I've ever seen.
More food for thought: Mitt Romney: Stimulate the economy, not government