Our President has been traveling the byroads on his Throw America Under the Bus Tour, in hot pursuit of anti-Republican class warfare all the while denying that he is campaigning so that he can rip off the public by forcing the taxpayers to pick up the cost of the trip.
After a week of warmed-over homilies and occasional meaningless proposals for minor change, all punctuated by a run to China by his favorite heavily-subsidized solar energy company, Obama promised a plan to revitalize the economy just as soon as Congress returns to Washington and he completes his next in a seemingly endless series of vacations. All of which begs the questions: “Mr. President – if you have a plan, where is it now? Where was it six months ago? A year ago?
Mr. President – can you not see how badly the country is suffering, the threats we are facing and, if you have a solution, why are you dragging your feet?” Salvation Via Teleprompter Yet We the People are promised nothing more than another speech. Have we not had enough of his speeches?
Blasts of hot air with no substance and less to show as achievements. It’s almost as if the man were praying for Salvation via Teleprompter. But then, why even ask? By now we have all come to realize that leadership is not Barack Obama’s style.
Seen as measures to revitalize our economy, every significant step that he has taken since inauguration, with the exception of those he was forced to take by Republicans after the 2010 elections, has been an out sourced failure. It's a disappointing agreement since my last blog the debt ceiling dispute ended as I feared it would.
The two sides agreed to make only the tiniest of spending cuts now, with other promised cuts really being caps to future spending increases or promises of cuts to come via a so-called “super-committee” of opponents drawn from both Houses of Congress.
Should they fail to agree there are to be unspecified “automatic” cuts in defense and Medicare. Perhaps a balanced budget amendment (wording to be determined) might have to be considered.
You can see the mirrors plainly, even through the smoke! A Lucky Break Through European Mismanagement In the immediate aftermath Standard and Poor’s downgraded our credit rating and that of Fannie and Freddie from AAA to AA+. Fitch retained our AAA rating for the nonce and Moody’s decided to wait a bit – probably until they see what the “super-committee” produces – before reaching a decision on America’s credit.
The only thing that has saved us from a massive increase in the interest rates at which our Treasury bonds are sold (and consequent increases in interest rates throughout the US economy) is the rolling collapse of the Euro. The smaller European economies do not have the money to pay their debt or the willingness to take the hard measures needed to reform.
They cannot default or inflate their way out of debt because they are part of a larger currency structure. And the Germans are understandably unwilling to impoverish themselves by buying the debt of their improvident Eurozone colleagues.
Eurozone financial management structures can do no more than impose short term delays of the Euro’s eventual collapse. All of this has caused an enormous flight of capital to the least risky currency haven that can be found.
Weak and unstable as it is, that currency is the dollar. So, with billions in frightened money flowing in from Europe to buy our T-Bills, our interest rates have actually fallen and are likely to stay low until the capital flow eases.
This makes it easier for Fed Chairman Bernanke to promise to keep interest rates low for two more years, implicitly promising to print as much money from thin air as he needs to. And, unfortunately, it eases the pressure on Washington to seek a positive solution to our debt and other fiscal problems. More Time and Opportunity to be Wasted Nothing that has been done contributes to a solution – it merely provides a little more time.
And Washington has a near-perfect record of wasting time. In truth it was only the fact that the House Republicans, spines stiffened by the Tea Parties, held the debt ceiling knife to the throat of the Democrats which made possible any spending cuts or even the discussion of cuts.
It was only the relentless and altogether praiseworthy exigency of the Republicans which brought the debt crisis to the broad attention of the public.
It was only Republican devotion to the salvation of our economy which drove the Dems from Obama’s initial insistence on a “clean” debt ceiling agreement and overwhelmed his demand that any agreement must include tax increases. Do you remember Obama’s challenge to House Majority Leader Cantor?
“Don’t call my bluff Eric. I’ll take it to the people!” But Eric did call Obama’s bluff and Obama did take it to the people. He held three press conferences and gave a prime time speech from the Oval Office on the debt ceiling issue. And all the while Obama’s popularity fell ten points in the polls and in the end he was forced, by a minority of one half of one third of the government, to accept an agreement which contained no reference to taxes. And yet the agreement eventually reached resolved nothing and included no actual cuts that mattered. And the debt ceiling weapon, a double edged sword that threatened both parties in the coming election year, has been sheathed until after the 2012 contest.
Can we hold things together until 2012?
When I consider how little was actually achieved, despite all the rancor and bombast, I am deeply frustrated, even scared. The huge threats to the stability of our economy, near negative growth, a possible second recession, stagflation on a scale that dwarfs that of the Carter years – all of these threats are still there are and untouched by the debt ceiling agreement.
At the moment the only thing which really protects us from the onslaught of inflation in interest rates is the continuing mismanagement of the Europeans. Clearly the first and most important step in rebuilding our economy is to energize the private sector through removal of constraining laws and regulations and severe tax reform to encourage investment, bank lending, the creation of new wealth and the return of wealth stored abroad.
Spending must be cut in series while borrowing is decreased in series. And future Congresses must be restrained via a balanced budget amendment to the Constitution. I know that we can expect none of this from Obama.
Any of it would be anathema to his leftist ideology and his desire to fundamentally transform the United States into a dependent state controlled by an authoritarian Marxist government. I also know that the solution to all of these threats can only be achieved with a conservative Republican President, Senate and House following the 2012 election. But I don’t know if we can deflect until then the dangers we face from a weakened and shifting global economy or from the Obama White House. And that scares me.
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