Barack Obama has been president for only seven weeks. The sub-prime mortgage crisis had been building for years before his inauguration. George Bush began the nationalization of our banking sector with the failed “TARP” plan. Congressional overspending has been a continuous problem since before World War 2. So how soon can we reasonably begin to hold Obama responsible for the accelerating economic decline?
The answer is that we have to hold Obama accountable now in proportion to his action and inaction. His actions — the spending spree in the trillion-dollar so-called “stimulus package” and his proposed $3.5 trillion budget — have further stalled the recovery by intervening too deeply and spending trillions of dollars we don’t have. His inaction on the promised financial market recovery plan fuels Wall Street’s panic.
Obama has proposed a budget of over $3.5 trillion accompanied by tax increases — such as the anti-global warming “cap and trade” emissions tax that will raise energy prices — resulting in an increase in the federal deficit to almost $2 trillion.
In a March 8 New York Times interview, Obama said this was a fiscally responsible plan. Unfortunately for our economy, the real world doesn’t agree.
The Dow Jones fell to twelve-year lows last week, having fallen about 20% since Obama’s inauguration. This is the fastest drop under a new president in 90 years, according to a Bloomberg News report. Unemployment has topped 8% and is still climbing rapidly. As the Washington Post financial page reported, about $10 trillion in wealth has been lost in the last seventeen months.
This drop in Americans’ wealth — and continued lack of confidence in Obama’s plans — affects everyone who’s either working for a living or living off retirement savings. It affects every small — and large — business. As Fox News’ Britt Hume said on Sunday, in today’s economy, Wall Street is Main Street.
Just last week, Obama opened up the Treasury Department as a consumer credit line in the amount — as he told the New York Times in a March 8 interview — of $1 trillion. Because of his massive — and so far counterproductive — intervention in the economy, it is now President Obama’s economy, and now is the time to hold him accountable for it despite the media’s continuous excuses for him.
Last Saturday’s front page headline story in the Washington Post said that the nation is losing jobs so quickly that the government is “racing to deal with the crisis” and “having trouble keeping up.” Why?
Where is the promised clear and specific plan to save the financial industry? It’s nowhere to be found. President Obama said he wouldn’t allow major banks to fail. But serial tax evader and Treasury Secretary Tim Geithner has said nothing — far less proposed a plan — to restore confidence in the financial markets.
The reluctance to take on Obama directly had hobbled House Republicans ever since Obama was elected. This week, their leaders looked down the $3.5 trillion gun barrel of Obama’s budget and said, “Enough.” House Minority Leader John Boehner — in a Wednesday meeting of the Republican conference — authorized the members to take on the president directly.
Boehner reportedly told Republicans that the president has responsibility because his signature is required to make these unproductive spending measures law. The budget? Said Boehner, “It’s the president’s budget. His name is on it.” So the gloves are off in this economic brawl.
And brawl it is. In the House, Speaker Pelosi’s changes to the House rules make it impossible to get recorded votes so voters can hold them responsible for the worst tax increases, earmarks and more.
Case in point: Republican Study Committee Chairman Tom Price (R-Ga) offered an amendment last week to make people who lied on their mortgage applications — i.e. committed bank fraud — ineligible for the mortgage bailout Obama has just put in motion. Price’s motion failed on a voice vote: he was refused a recorded vote under Pelosi’s new rules. The Democrats have rigged the deal so voters can’t hold them accountable.
Pelosi’s House is darkened, and she permits no light to shine within. Which is why House conservatives have to hit back harder and louder in the media.
In the March 8 New York Times interview, Obama said he’d prevent bank failures. But how? “In the entire banking sector — we spend every day, myself, Rahm Emanuel, Tim Geithner, Larry Summers, Christina Romer, every single day, we will spend at least an hour of my time just talking through how we are approaching the financial markets.” That’s cold comfort to Wall Street.
Last month, before Geithner’s speech that was supposed to tell us his plan to save the financial sector, Obama promised, “He’s going to be terrific.” Again and again, Obama raised expectations, saying Geithner would be “clear and specific.” But Geithner was neither.
Wall Street — including the banking sector — is burning itself down. The fire is fueled by panic — the final stage in a decline of confidence — and can only be put out by measures that restore confidence.
Economists define a depression as either a decline in real Gross Domestic Product — the inflation-adjusted value of all goods and services produced in a year — or a recession that lasts more than three years. As unemployment continues to rise and the recession goes through its second year despite Obama’s initiatives, we are headed toward a depression.
But President Obama — having first claimed that only government can solve the economic problems — is failing to provide any solutions Wall Street can believe in.
Republicans can and must seize the moment. They have chosen — correctly — to go directly at the president.
To do that, their message has to be in two parts. First, Obama is concentrating on “greening” the economy, on transforming healthcare and education, none of which are at the root of the economic meltdown. Republicans should be showing why Obama’s plan will not and cannot restore the needed confidence in the markets.
Second, Republicans can begin rebuilding market confidence by doing what Obama and Geithner prefer to just talk about: present a plan to save the financial markets from further government intervention and to undo what President Bush started last fall: the nationalization of our financial industry.
There are a lot of good ideas coming out of the House Republican Study Committee and the Senate Steering Committee, the conservative caucuses in each house. The two should band together on one plan of historically-proven tax cuts and de-nationalization of the financial sector. A joint bill — a Price-DeMint bill? — should be their common focus.
As David Smick said in his brilliant book, The World is Curved, a government that micromanages an economy defeats the purpose of the free market and dooms it to failure. Obama has America headed into a period like Japan’s “lost decade” of economic instability and lack of growth. Conservatives may be able to prevent “Obama’s lost decade.” They can do best by uniting around a single plan and going directly to the American people with it.