Friday, September 9, 2011

Just Another Empty Speech

Do you remember just a month ago when we had a standoff about raising the debt ceiling? It was raised, along with a half-hearted promise to lower spending sometime about a decade down the road. And then, of course, our AAA credit rating was lowered to AA+, which means when we borrow, it will be at a higher interest rate, costing us even more over time. 

So when it was announced that 2 ½ years into his presidency Obama would finally give us a plan to improve the economy—specifically to help correct the lingering high unemployment rate—even the skeptical among us had “hope” that he was going to “change” to something that would work. Something other than “Let’s gouge the rich some more,” which is really getting old. And something other than “Let’s spend lots more money so that the private sector won’t misspend it, no matter how much that causes the recession/depression to linger.” We also wanted something other than, “What Bush left us was a much bigger mess than we had anticipated.” 

So what did we get? “Let’s spend nearly another nearly half trillion that we’ve already clearly shown that we don’t have. It will be paid for, not additional debt, which I’ll explain later, but you can assume it will be by making the rich finally pay their fair share [i.e., gouge the evil rich who already pay most of our revenue]. And Congress has to pass it, or I will go around the country blaming them for all our nation’s ills, since blaming Bush is getting unbelievable.” That about summarizes it.

It turns out I am still capable of being shocked. Obama had the “audacity of hope” to order the Congress to blow off a long-scheduled presidential candidate debate for this earth-shaking speech, almost the very moment Congress returned to session after the August break. We were to assume that he had used his own Martha’s Vineyard golf vacation to prepare, perfect, and hone this most important plan. And we are to assume he was just more than gracious for consenting to put it off till the next day, and further, to speak early so as not to interfere with the opening of football season. 

Imagine if he had actually pre-empted either the debate or the ballgame—on the pretext that his message was so urgent that the world must stop for it! He did not actually present a plan. At it is possible to get a bare outline of the supposed plan, but it’s blissfully free of details [my cursory view of it looked like the bare details repeated a couple of times]. The speech itself presented almost nothing. Just a promise of another speech, a week from Monday, in which he will detail how it will be paid for. In the meantime, let it be known, Congress must pass this undefined plan. 

Did he mention that Congress must pass this plan? Why yes, yes he did. Seventeen times, by my count. [I downloaded the transcript, used find and highlight commands for the word “pass,” left out the few that didn’t relate to this meaning, and counted 17. You can do it yourself.] 

A 44-second montage of the many times he said to pass the plan can be found here:  

Among a few responses I came across after the speech was Kevin Jackson of Blacksphere, which made me laugh out loud, a good thing in bad times:  

Apparently we only got half the speech. The second half of the speech supposedly contains the actual meat of Obama’s program, but that part of the speech is on layaway. It seems America couldn’t afford to hear both parts of the speech together, thus the installment plan. 

The speech may be on layaway, but Obama says that his job-creating ideas of which we will be blessed to hear soon are funded. The new round of blood-letting will cost the taxpayers around $500B, which in government-speak means $1T+. We can spend our way into more jobs.  

Obama has yet again grabbed America by the wallet and said, “Cough.” 

Just like he promised when he was running for office, Obama will create more jobs. Just not in America. 

Speaking of creating jobs, Ford, that all-American force of innovation, announced this week that it will be opening up another factory in India. Are they suddenly anti-American? Or are they trying to find a way to keep their head above water in the face of outrageous union labor and regulations that presumably even Obama is now in favor of scaling back (as long as there’s no loss in safety)? Or maybe it’s just part of doing business worldwide and has no political ramifications at all. Maybe.

Here we are at Friday, and I haven’t tackled the other two charts referred to in Monday’s number-crunching piece. Still considering spelling it out, but here are some basic economic premises Obama seems to be ignoring. 

  • When government spends money, that means the private sector has less money to spend on basic economic purposes, including hiring workers. “Stimulus spending” does not “stimulate” the economy; it uses money that would otherwise have been used more efficiently and effectively by private enterprise. The only thing “new” about more stimulus is facing a higher interest rate on the resulting debt.
  • When you raise taxes, you don’t necessarily raise revenue, because people change their behavior based on whether they receive less benefit (hold money instead of spending it on capital projects, hold it in forms subject to lower tax rates, or hold it in offshore accounts not subject to the taxes—see the Laffer Curve). So having a plan “paid for” by raising taxes will not guarantee raising revenue. Revenue is more likely to rise with lower taxes that result in growth in GDP.
  • Whenever federal spending goes to projects that are not part of the Constitutionally delineated powers, negative unanticipated consequences result. 

So, should Congress consider the plan (once it appears), rather than dismiss it out of hand? Sure. And then, unless it is a plan of significant federal spending cuts from areas where the federal government shouldn’t be involved, and unless it releases money to the private sector rather than raising taxes, Congress should stand firm and refuse to pass it. They have offered alternatives, dismissed out-of-hand by this president. So let this ineffectual man travel around and blame them to his heart’s content. Blaming Republicans, who hold only one-half of one branch, for what he did wrong during two full years of total control will simply not satisfy as a substitute for a plan to get Americans back to work.

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