How Soon We Forget
By Robert Romano
“[O]ur time of standing pat, of protecting narrow interests and putting off unpleasant decisions—that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America… For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act… [T]here are some who question the scale of our ambitions—who suggest that our system cannot tolerate too many big plans. Their memories are short…”—President Barack Obama, Inaugural Address, January 20th, 2009.
It is President Barack Obama who needs a memory refresher. It is he who has not learned the lessons of history—and those of the current crisis he has inherited and which government created—as he takes office as the nation's 44th President.
The national debt is over $10.7 trillion, and if the nation does not rapidly change course, it may well be on the way to adding another $10 trillion. Already the Obama Administration—and its willing accomplices in Congress—are ready to spend another $825 billion to “stimulate” the economy, which when added to the already-projected deficit of $1.2 trillion will bring the deficit for this year alone to over $2 trillion.
In 2008, government already took “action, bold and swift.” To date it has pledged in addition to the $700 billion in TARP funds, as noted in Americans for Limited Government Chairman Howie Rich's column, some “$2 trillion in FDIC assurances, $1.75 trillion in Federal Reserve commercial paper purchases, $900 billion in term auction facility lending, $600 billion to insure money market funds, $600 billion to cover Fannie and Freddie's worthless mortgage-backed securities, $550 billion for discount Federal Reserve loans, $500 billion to insure FDIC deposits, $300 billion for FHA mortgage relief, $250 billion for Citigroup debt, $225 billion for securities loan facility lending, $200 billion for Fannie and Freddie's debt, $112 billion for A.I.G., and on down the line.”
These numbers are simply astronomical, are unprecedented, and if Mr. Obama follows through with his economic central-planning—which will be largely dependent upon borrowing money overseas—they will only get worse, burdening the American taxpayer with mountains of debt for generations to come.
Really, $825 billion for economic “stimulus”—more accurately, it is debt stimulus—is just the beginning. That is prior to his plans for nationalizing health care, costly cap-and-trade in the name of the greatest fraud ever perpetrated in the scientific community, and doubling down on an unsustainable education system that relies almost entirely upon excessive taxation and student loans just to meet year-to-year expenses.
In the end, these plans for deficit-spending and monetary easing could well end up bankrupting the nation and causing cascading inflation. In the near-term, they are designed to create another asset bubble so that politicians can claim credit for a “recovery,” but in reality—and in the longer term—they are enslaving a nation.
And to date, Mr. Obama has not pledged to reform and repeal the policies that actually led to the financial crisis in the first place: too much credit, too low interest rates, and regulations by government to force banks to give out loans that ultimately could not be repaid. Minus that, and his plan is really only a debt stimulus.
To make matters worse, Mr. Obama is not the least bit worried about it. In his interview with 60 Minutes in November, he said, “[Y]ou actually have a consensus among conservative Republican-leaning economists and liberal left-leaning economists. And the consensus is this: that we have to do whatever it takes to get this economy moving again, that we're gonna have to spend money now to stimulate the economy. And that we shouldn't worry about the deficit next year or even the year after.”
And even worse yet, he sees no end in sight. This month he said, “[P]otentially we've got trillion dollar deficits for years to come, even with the economic recovery that we are working on at this point.” In other words, even with his economic “stimulus,” the economy will not be sufficiently stimulated to even boost revenues to the Federal Treasury.
The whole point of Keynesian, demand-side “stimulus” is to provide immediate relief, but instead Mr. Obama does not even believe that will happen.
A growing number of conservative economists—real ones, not the straw men President Obama touts in his 60 Minutes interview—are actually quite skeptical of the economic benefits of the “stimulus” package. For example, Roger Meiners, Professor of Economics from the University of Texas at Arlington states, “The stimulus plan is little more than a grossly-inefficient special-interest grab bag that will leave a massive burden for our grandchildren to pay and, in the meantime, deter development of more productive sectors of the economy in favor of those politically favored.”
And a recent study done by UCLA economists found that Depression-era policies actually prolonged the economic crisis facing the nation, despite overwhelming public opinion in favor of those policies.
Those who do not learn the lessons of history are doomed to repeat its mistakes, and President Obama appears ready, willing, and able to plunge down the errant course once more.
Robert Romano is the Editor of ALG News Bureau.