A year ago, President Bush and Congress passed a “stimulus bill” for $146 billion to jumpstart the economy. It failed. Last summer, a housing bill was passed to save Fannie Mae and Freddie Mac. It cost $300 billion and it also failed. In the autumn, with the collapse of Lehman Brothers and the failure of Fannie and Freddie, the government then passed a “bailout” for Wall Street to the tab of $700 billion. It was a failure. A few weeks ago, President Obama signed into law another pork-laden stimulus bill, the euphemistically entitled American Recovery and Reinvestment Act of 2009.
In one fell swoop, with one signing, and in just five weeks, President Obama committed himself to spending $787 billion of the taxpayer’s money — something none of his previous 43 predecessors could have the dishonor of saying.
Add to this President Obama’s $410 billion omnibus spending bill for 2009, his FY 2010 $4 trillion budget with $1 trillion in tax hikes, Federal Reserve Chairman Bernanke’s pledge of $4 trillion, and Treasury Secretary Geithner’s plan for another $2 trillion — that’s trillion with a “t” — and what you have is not “change” between administrations, but rather Bush-Obama continuity which, in and of itself, represents an unprecedented change and fundamental threat to our longstanding socioeconomic way of life.
The Heritage Foundation, a prominent conservative think tank, has made this case quite clearly. President Bush enlarged government more than anyone since Lyndon Johnson; Obama will accelerate and expand on that. Bush inflated the federal budget by $700 billion; Obama will add another $1 trillion. Bush enacted a Medicare drug entitlement that will cost $800 billion; Obama wants $634 billion for government-run health care. Bush increased federal spending on education 58 percent faster than inflation; Obama wants to double it. Bush spent three percent of GDP on anti-poverty programs (the first ever to do so); Obama has already increased this spending by 20 percent.
For eight years, Democrats succeeded in portraying George Bush as a stereotypical conservative, given his penchant for good-ole’-boy southern social values and his proclivity for an assertive foreign policy posture. But economically, nothing could be further from the truth. George Bush was not a small-government conservative. He grew government, and the role of government, immeasurably. And Obama wants to add to that. Big time.
Under President Obama’s proposed budget, our deficit will hit $1.8 trillion this year — quadrupling the 2008 record shortfall and amounting to 13.1 percent of the country’s entire economic output. The Congressional Budget Office has projected $9.3 trillion in deficits over the next decade. That is $2.3 trillion worse than the Obama administration’s early predictions, $1 trillion per year until 2019, four times as much as President Bush’s deficits, and over five percent of the nation’s GDP — a perilously high level that simply cannot be sustained. Under Obama’s budget, the national debt would also double to 82 percent of the country’s GDP.
Senator Judd Gregg, who was Obama’s nominee for commerce secretary before withdrawing his name in protest, believes this budget will bankrupt the United States, stating, “If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued.”
And how is Obama handling the influx of troubling numbers? By doubling down on Bush’s policies, to paraphrase Brian Riedl, and by, of course, doing what he does best and what got him elected in the first place: over-promising. For example, in the midst of all this insanity, Obama has incredibly pledged to cut the national deficit in half by the end of his first term. Despite the statistics, he has not backed down from this assurance.
To put it politely, this is sheer madness. Those of us rooted in reality, however, look on with eager anticipation — for if Obama proves us wrong, he will have defied not only the laws of politics and economics, but those of science and physics as well. It will, in short, prove to be the most amazing thing any leader, of any country, in any period of time, has ever done, ever. At first, that seems like a high bar to achieve for a 40-something law professor from Chicago. But then one recalls those nifty “progress” posters and one’s doubts are immediately put to ease.
During the campaign, and in the period after the election and before the inauguration, Obama’s supporters articulated what they believed would be Obama’s historic position and relevance. They believed the Bush-to-Obama transition would be reminiscent of the Carter-to-Reagan change, where an unsuccessful administration, widely perceived as a failure, would be followed by a saving-grace leader, who in time is vindicated by history. According to this vision, Bush was to be the Republicans’ Jimmy Carter and Obama the Democrats’ Ronald Reagan.
But here’s the catch: Reagan broke sharply from Carter’s worst policies. Obama is intensifying Bush’s.
And wherever Obama is, in fact, breaking from Bush, he’s breaking in the entirely wrong direction. As ABC’s Jake Tapper explained, Obama has proposed $989 billion in new taxes, most of which will be on individuals. Obama will let the Bush tax cuts expire and will hike the capital gains tax on the “rich,” which will cost the rest of the country $636 billion over ten years. On businesses, Obama will repeal LIFO, the expense of drilling costs, eliminate advanced earned income tax credits, rescind the manufacturing tax deduction for oil and natural gas companies, and more, which will cost the entire country an estimated $353 billion.
This rise in spending is without parallel. As Tim Reid phrased it, “A keen poker player, Mr. Obama is gambling not only his own presidency, but the future well-being of the country. If he pulls it off, they might find room for him on Mount Rushmore. If he fails, he could bankrupt the world’s largest economy.”
Think about it: when going through tough financial times, do individuals save their money — or do they spend more than at any other time in their lives? They save, of course. Then why should governments abide by another standard? Why shouldn’t this logic be applied on a macro-level?
President Obama insists now is not the time to “do nothing.” But rather than “doing something” and focusing on the task at hand — the housing collapse and the financial sector — Obama has instead used this recession to advance his own political agenda by radically Europeanizing (read: “change”) the energy industry, the health care system, and the education system. Charles Krauthammer calls this what it is: deception. He goes on, stating:
As an explanation of our current economic difficulties, this is total fantasy. As a cure for rapidly growing joblessness, a massive destruction of wealth, a deepening worldwide recession, this is perhaps the greatest non sequitur ever foisted upon the American people.
At the very center of our economic near-depression is a credit bubble, a housing collapse, and a systemic failure of the entire banking system. One can come up with a host of causes. …
The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy.
Imagine a similarly absurd hypothetical scenario: Social Security collapses and Obama says we need to septuple or octuple our spending for NASA, implying space exploration will fix Social Security. Crazy, right? Well, welcome to President Obama’s economic recovery plan. It’s as if Obama thinks we’re all idiots and equally detached from real-world actuality.
Despite Obama’s best efforts, the economy will rebound in due time. That’s the nature of the beast. Yet it will be then, at the very beginning of recovery, that the pain from Obama’s frivolous spending will truly be felt. In the last five months, the geniuses in Washington have nearly tripled our money supply. Needless to say, during a recession, nothing else really grows, let alone doubles or triples.
But in one or two years’ time, things will begin to recuperate. It will only be then that all of this money, naturally, hits the market — all at the same time. The inescapable effect will be devastating hyperinflation. This will cause even greater unemployment at home, and considering the interconnectivity of the global economy, even greater economic downturns around the world. The only way to get out of double-digit inflation is to endure another recession. When this happens, the sad part will be that this all could have been avoided if only we stuck with, and continued to believe in, classically American economic principles.
And to think that all of those starry-eyed first-time voters went into the voting booth and thought their ballots would bring about a clean break from the “failed policies of the last eight years.” What a pity it is that the misplaced but sincere idealism of 2008 will invariably become the widespread cynicism and disparagement of tomorrow.
Join the conversation as a VIP Member