George W. Bush, his critics said, was isolated and unaware of how badly things were going in Iraq. He was caught up in a messianic vision to bring democracy to the Middle East. Meanwhile, he stubbornly clung to grandiose domestic policy proposals (e.g., social security reform and immigration reform) when the timing was simply not right. Some of that has been disproved by subsequent events (e.g., we did bring democracy to Iraq) or revelations about his own intimate involvement in reworking a failing Iraq strategy. But the image remained of an isolated and out-of-touch president.
As queasy as it might make us feel, we might consider that we have gone from the frying pan into the fire. Obama does not perceive things are substantially worse or that his “strategy” is failing. He also seems to have the timing terribly off as he discusses an onslaught of taxes and regulation while the economy is staggering. And to make matters worse we have no General Petraeus to help guide us back from the brink of ruin. We have instead Tim Geithner.
In a brilliant posting, small business owner Jim Prevor makes clear that the president is frightfully oblivious to the real world impact of the stock market crash on the lives of ordinary Americans (and hence on our prospects for recovery). Prevor explains:
Every stock market investor quickly learns that the math of markets is forbidding. After all, if stock prices go down by 50 percent, they have to rally by 100 percent to get one back to even.
Yet this doesn’t begin to explain the problem. In political polling, all’s well that ends well. But this is most decidedly not true in the stock market.
If a family needs $25,000 to pay tuition and it sells stocks to raise the money, that money is not available to benefit from any future upswing in market values. So even if Obama orchestrates a miraculous rebound, countless millions of people will have been permanently hurt.
And for individuals and businesses who tried to use prudent margin, Obama seems oblivious to people sitting at their desks desperately trying to navigate not only margin calls but announcements that their brokerage firm has decided the maintenance requirement on certain stocks has been raised and, suddenly, people have to sell anything of quality because they need to raise cash. They get stuck with illiquid portfolios and the selling pressure on anything of quality is immense.
These people and businesses are wiped out, whatever the long term effect of the President’s policies.
And yet the president flicks away the real world news, while his supporters point to poll numbers. That’s right — we have 8.1% unemployment and a stock market crash; they take refuge in a popularity poll more than three and half years before the president would again face the voters. (To its credit the Bush team never boasted about polls numbers or showed much concern when their fortunes changed.) And in their spare time they devise a juvenille plot to attack a radio talk show host.
Rather than ruminating on the worsening economy, Obama is cheered by polls and fixated on redesigning America. The cratering economy doesn’t give him pause. Instead it encourages him to speed up before the voters catch up with him.
And he seems intent on running “victory laps” over the stimulus bill passed weeks ago. Surely campaign-style events touting his handiwork don’t do much to improve the economic outlook going forward. And his cheesy recovery logo only reinforces the sense that he is obsessed with garnering credit, keeping his poll numbers high and reinforcing awareness of government’s growing presence in citizens’ lives. None of this has much to do with improving the climate for job development, economic growth, and private sector confidence.
Defenders of the president dismiss the notion that Obama’s policies and rhetoric are in any way responsible for our current plight. It happened on Bush’s watch! Of course it did. But they misstate their opponents’ criticism — another straw man in a growing army of them. The question is not whether Obama caused the recession, but whether he is making it worse. Even the AP spots the fallacy of the Obama administration’s defense: “Although the administration likes to say it ‘inherited’ the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.” And it is simply folly to deny that the devastation of wealth in the stock market has made things worse and further unnerved Americans. The stock market crash is the greatest anti-stimulus development of his presidency. Obviously, consumers and homeowners feel even less financially secure than they did when the Dow was 3,000 points higher.
Donald Luskin writes:
What will our world look like when President Obama “reforms” health care by nationalizing it given that it represents about one sixth of U.S. economic activity (and the part that’s still working)? What will happen to the cost and availability of electricity when he puts in place a “cap-and-trade” tax on carbon emissions? What will happen to Wall Street when taxes are raised on hedge fund and private-equity managers? What will happen to all of us when all our taxes go up and our deductions go down?
I have a pretty decent idea that none of that will lead to anything good at least not economically. You may disagree. But can’t we at least agree that President Obama is stirring the pot by ramming all these things through now, at a time when he ought to be calming things down so we can all catch our breath and the economy can get back on its feet?
Perhaps if the Treasury Department was fully staffed or if Paul Volker was not apparently banished to an undisclosed location, the president might have a better grip on why his anti-business, anti-wealth-creating policies and rhetoric have sent the markets skidding. Maybe if the national press were less invested in his New Deal II vision, he would confront daily criticisms and aggressive questioning about his schemes. And if he spent more time talking to agitated wealth creators, investors, retirees, and middle-class parents and less time at photo-ops and campaign-style rallies with handpicked fans, he might internalize what it means to lose half or more of your retirement or college fund.
But on he strides, into the Brave New World of a government-directed economy. (Incidentally, if Tim Geithner is not the best advertisement for limited government I don’t know what is.) And the scariest part of the first six weeks of this administration? The realization that, contrary to his defensive remark in his joint address to Congress, he really doesn’t “get it.”