I was listening to White House Secretary Robert Gibbs on NBC's Meet the Press this morning. I am getting so sick and tired of hearing political spin and legend: how Bush inherited a budget surplus and "drove" the economy into the ditch.
A President has very little direct control over the economy. The Fed Reserve serves as an independent voice over money supply. A President can principally affect the economy by expanding markets for American goods and services. A President can also support business growth by not crowding business out of the credit market (i..e, controlling spending), by providing a more consistent, predictable market and by minimizing the government footprint in business operations and planning, i.e., taxes and regulations.
Progressives look to the Bill Clinton years as some sort of economic miracle grow. In fact, he raised the upper income tax rates from the lowest (under Reagan) and the status quo (under George H.W. Bush). But, among other things, many small corporations are taxed at the individual level. So when you look at a top marginal tax rate at 35%, and Obama wants to raise it, like Bill Clinton, to nearly 40%, that's a steep cost increase. Not to mention penalties for not giving health care benefits. The progressives want to give Clinton credit for the balanced budget because he raised the upper tax rates. But in fact, tax revenues as a percentage of GDP has remained fairly stable despite significant changes in tax rates. There were a number of unusual circumstances, including a decrease in defense spending because of the end in the Cold War, a business productivity boom, largely driven by information technology/Internet growth, and loose money by the Fed, in part because of over-hyped Y2K fears. The stock market bubble started bursting in year 2000, Clinton's final full year in office, resulting in a recession.
Bush was in his eighth month in office when 9/11 hit, which devastated the travel industry, along with the numerous corporate financial scandals. In contrast, the TARP legislation and much of the framework dealing with the economic tsunami was set up during the Bush era, not the Obama. It is true that just as Clinton's economic gains were affected by the stock market bubble, Bush's was affected by a real estate bubble that also had its origin during the Clinton era.
However, if you look at GDP growth, it went from $6.3T in 1992 to $9.95T in 2000, to $14.4T in 2008. We saw a contraction in the GDP for the first time since the 1940's under Obama. And no matter how Obama puts lipstick on his record pig, he is on track to exceed the total deficit for Bush's 8 years in just his first term in office--unless a GOP Congress is elected to hold spending in check just as they mostly shut down Clinton's spending spree.
Did Bush drive the economy into the ditch? If you blame AIG on "unregulated derivatives", the issue was more of AIG's failure to hedge its position for risk--and AIG submitted reports to regulators, was audited, etc. But derivatives were not a line of business that emerged during the GW Bush administration, and Clinton himself signed off on financial deregulation. If it's not AIG, what was it? The GSE's? After Bush tried to encourage relevant reforms and Obama and other Democrats refused to support them? Was Bush responsible for the loose money policy propping up the real estate bubble? Isn't that the responsibility of the independent Federal Reserve?
You hear the President talking about how he rescued the economy in free fall over the early part of last year. And just what did he think he "saved"? An $800B stimulus bill of which only a small percentage was disbursed during the first 6 months? In a $14T economy? A stimulus bill which he sold on the basis of keeping the unemployment rate capped at 8%? Even by his own hype, Obama's economic policy has failed to meet expectations.
I think what bothers me most about Obama's hype is that he sincerely believes that the President's role is to drive the economy. A President's job is not to meddle in the internal affairs of business but to foster its growth and clarify its outlook by reducing fear, uncertainty and doubt. If it regulates, it regulates to the minimal degree necessary for a compelling public interest. Almost everything Obama has done violates these principles; in effect, he's increasing tax rates on higher income and on investment taxes next year. That is likely to have a dampening affect on growth. He has not pursued 3 free trade agreements negotiated by Bush. He has or is pursuing de facto taxes on health care and energy. He unnecessarily called for a moratorium on offshore drilling in the Gulf, despite only one industrial accident over decades of drilling in the Gulf. He has sided with union interests in dealing with bondholders in the automaker bankruptcies.
This is part of his design. "We can't afford to do nothing..." Wrong. We don't afford to do the wrong thing. An unpredictable activist President actually obfuscates the economic landscape and freezes decisions in the private sector.
This is not meant to exonerate Bush; I have several criticisms I've listed in past posts. But Bush is not on the ballot, and it's time for Obama to take responsibility instead of constantly blaming his predecessor. In the aftermath of 9/11, Bush was not talking about why Clinton failed to take out Osama bin Laden; he was demanding that the Taliban hand him over.
First Campaign Ad of 2012?
Sarah Palin's PAC has issued a 'Mama Grizzlies" video , widely seen by many as foreshadowing a likely 2012 bid for the GOP nomination. In fact, Sarah Palin is looking to mobilize what she apparently sees her niche--the working/suburban moms and grandmas, the backbone of the family--for the 2010 election, pushing back against the obvious excesses of the fleshed-out Obama "hope-and-changey" agenda. Of course, the traditional path to the nomination is to go around the country helping party candidates get elected. The video is unmistakable: she intends to run in 2012. The video has a soaring musical score behind it; in a sense, the theme of "mama grizzlies" seems to be a feminine spin on McCain's most potent moments during the 2008 campaign, the theme of "stand up and fight". Ultimately, it's unsatisfying, like intellectual cotton candy; Sarah Palin takes Republican spin to a whole new level, but you rarely hear anything innovative or of substance from her beyond an occasional one-liner.
Any faithful reader of this blog knows that I have been a consistent conservative critic of Sarah Palin; she didn't kill the Bridge to Nowhere for months after learning budget numbers had doubled on the project funding approved by Congress and implied that she had given the allocated money back to Congress (the earmark allowed the Alaskan legislature to spend the original funds on other projects). Palin got a windfall profits tax on the big oil companies and took her fair share of earmark money from the US Congress. Then there was the disingenuous attempt to rationalize her decision to step down as governor of Alaska barely two-thirds of her way in a first term in one of the 5 least populated states with no state income tax, high natural resource revenues and the highest per capita net receiver of federal dollars. Never mind the Troopergate scandal (which, contrary to her claims, did not exonerate her) and her unprofessional personal attacks on a late-night comic. By any objective standard, Sarah Palin lacks the knowledge, experience, temperament, and judgment to be President. How do I explain her popularity? I think her moral courage to knowingly carry a Down syndrome baby to term appeals to a number of pro-life conservatives like myself. I also believe she has a certain populist appeal and uses the media better than any other Republican I've seen since Ronald Reagan.
You can phone in a winning 2010 campaign--we have an unemployment rate of 9.5% which has more to do with jobless giving up on the job market and thus off the official statistics than organic employment growth; we have massive deficits and ineffectual spending; we've had a deeply unpopular health care bill passed with corrupt deal making among Democrats, AFTER Scott Brown (R-MA) won Ted Kennedy's seat, the first GOP US Senator from deep blue Massachusetts in over 30 years, campaigning as the 41st filibuster-sustaining vote.
It takes more than a negative campaign; even if the Republicans win this fall and recapture the House, it might be Obama's best chance for reelection. For example, he will have more than enough votes in either the House or the Senate to sustain the veto of austerity legislation and try to posture himself as the protector of the common man against Scrooge-like Republicans. He would undoubtedly try to replay the Gingrich-Clinton budget standoff, where Gingrich blinked and Clinton surged to a second term. He would then posture himself during the general campaign as a check and balance against a runaway Republican Congress and to protect his health care legacy.
The Republicans need to provide positive reasons for change, not the FNC slobbering love affair with all things Sarah Palin. Whereas the contract from America is a good start, I suggest that the GOP takes a broader approach; America wants reform of the political status quo--things like jamming partisan measures down the nation's throat, public relations one-day "negotiation" events, corrupt deal making, convoluted bills that defy meaningful votes or 3-day transparency review periods, Washington speak (e.g., terming unemployment extensions in a weak economy as "emergency spending" to bypass normal scrutiny, stimulus for old-fashioned spending, etc.), Speakers refusing to present a budget, and abuses of the budget reconciliation process and the filibustering of judicial nominees. We need less political posturing and more negotiations without preconditions, less finger-pointing and more responsibility taken and results. We need broad-based tax cuts (particularly on the business side) and spending cuts. We need to cut back on federal hiring and compensation packages and streamline government operations; we may need to do more in the way of depoliticizing spending cuts and project assessments.
Political Cartoon
Jim Morin of the Miami Herald suggests that Obama has enough unfinished business to fill his plate, without ordering yet another politically divisive issue to the table. Obama himself is partially responsible for the demise of the 2007 immigration compromise by submitting and/or supporting poison pill amendments to strip key Democratic compromises, including a temporary worker program and merit-based immigration. In fact, Obama also managed to squeeze a divisive element into the base bill that would allow currently unauthorized visitor a significant appeal period AFTER having been designated as unemployable.
But code words like "path to citizenship" and "comprehensive reform", which reward mostly unskilled unauthorized visitors for working around the system at the expense of people from other countries and continents whom don't have the same access to US borders and play by the rules, which makes a mockery of immigration quotas and is biased in favor of unskilled workers? Even strongly pro-immigration conservatives like myself oppose that. We aren't talking simply about seasonal farm workers; we're also talking about construction workers and low-skilled positions in metropolitan areas with chronic unemployment problems. What we pro-immigration conservatives want is an end to chained immigration which clogs up immigration quotas with low-skilled relatives of recent immigrants displacing (among other merit-based occupations) entrepreneurs, engineers, and information technology and medical professionals. From my pro-business growth perspective, the Democrats have it backwards; we are providing state-of-the-art education to outstanding foreign students whom often find themselves without a path to citizenship and bring their entrepreneurial ambitions back to their home countries to compete against us. I'm also annoyed by progressive bait-and-switch arguments, pointing out the importance of one in 4 agricultural workers being undocumented to the economy. You don't get an average household income of $36K on sub-minimum farm wages. And somehow all those agricultural workers didn't make it to apple and cherry country in Washington state, where progressives make it more worthwhile for many unemployed people to collect unemployment than to pick apples at $12/hour; one farm alone applied to temporarily hire over 1000 Jamaicans legally. (I guess I can't accuse registered Democrats of cherry-picking in this context...) A similar phenomenon exists for seasonal gardener work in Michigan. And notice what the Democrats have been trying to DEM-agogue lately, besides immigration? Unemployment benefits, which the Democrats refuse to pay from already allocated but unused funds (sort of a Democratic slush fund), insisting that that more money for unemployment be paid with fresh federal debt. Oh, surely no moral hazard there!
Quote of the Day
The best minds are not in government. If they were, business would hire them away.
Ronald Reagan
Musical Interlude: Chart Hits of 1991
Whitney Houston, "All the Man I Need" favorite Whitney song!
Bryan Adams, "Everything I Do, I Do It For You"
Amy Grant, "Baby, Baby"
Extreme, "More than Words"
Rick Astley, "Cry for Help" best Astley song!
