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Administrative Delusion

Administrative Delusion

Yesterday on CBS Sunday Morning, President Barack Obama was being interviewed by Harry Smith.  This seems to be this President’s primary function.  I can just see his job description now–Item 1, must interview with the media incessantly.  Never mind running the country.  We’ll leave that to Pelosi and Reid.  And, who can blame him?  It’s more attractive to meet with adherents to your policies, glowing supporters and people who will fawn over you than with the other 80%, the rabble, the people who just don’t get it.  Bring on The View!  They love me!  Everyone must love me too!

Anyway, Mr. Smith asked the President if he thought the criticism leveled at him and his administration was “undeserved”.  “Yes”, the President replied, “it is undeserved”.  He went on to suggest that the future will be kinder to him and his administration once people begin to understand all that he has had to endure and reform in the first 18 months of his administration–that is, the recession, bailouts, health care reform, financial reform, etc.

What?  Is the President delusional?  Politics, particularly modern politics, has always been about the mastery of spin, and this administration is clearly good at it.  But the American people are tired of it, and for the last six to nine months, have begun to see it for what it is–nonsense.

First, President Obama needs to understand–deeply understand–that the stimulus, bailouts, deficit spending, health care reform, and now financial reform, have run counter to the will of the majority of Americans.  Not the people in the la-la land of Obama and cronies, but the folks who do the tax-paying, hiring, spending and bill-paying.  The President’s agenda of wealth redistribution is not what they signed up for.

Second, President Obama needs to understand that there are deep concerns about the economy that transcend stimulus and the expiration of the “Bush tax cuts”.  Last week’s release of economic statistics are a perfect example.  The housing industry is in severe recession still, and no amount of home-buyer incentives will work any longer.  Consumer confidence is low and durable goods orders are soft.  New claims for unemployment benefits were 457,000 in the previous week, suggesting that companies continue to lay off workers.  Finally, preliminary GDP estimates say the economy grew at a 2.4% rate in the second quarter, a mediocre reading at best.

The President is clearly out of touch with his constituents.  Nervous companies are not hiring.  Nervous consumers aren’t spending money (at least, the ones who are working).  And until they are confident that the government is going to stop spending money and that their taxes are going to remain stable, they will not spend or invest, or do anything but sit on their cash.  At least, until the government takes it…

Is the criticism deserved?  You bet!  But we’ve seen this movie before.  We know how it ends.  It was called the Carter Administration and it ended with the resurgence of conservatism and Ronald Reagan.  As long as the current Administration continues to ignore the people and continue down the road they’ve set before them, they can continue to expect criticism.  They are self-destructing.  How I love a happy ending!

The Case Against Financial Institutions Regulation (and other sundry items)

The Case Against Financial Institutions Regulation (and other sundry items)

The news events of the last few months have certainly put the Obama Administration in a peculiar position.  The Gulf crisis notwithstanding, most of these events have been created by this president and his staff.

Team Obama went the the G20 Summit in Toronto this weekend to chide the other 19 nations to continue to stimulate their economy through Keynsian economic principles.  “Not so fast”, said the other countries.  “We have to make choices, and right now, we choose fiscal solvency and prudence”.  What a concept!

Passage of the Financial Institutions Reform package was always tenuous, at best, but the death of Senator Robert Byrd over the weekend makes passage more difficult.  One less Democratic vote means that it’s more likely that Republicans can filibuster this package, and this is a good thing.  Here’s why:  Any bill that increases regulation, drives up costs to the consumer, and squeezes financial services companies’ margins will negatively affect the economy.  The costs of increased regulation always get passed along to the consumer in some way, shape or form.  Limiting profits also limit tax revenues to the US Treasury in the form of corporate taxes, as well as limiting the taxes paid on dividends.  Finally, no company will hire if they have to choose between new employees and profitability.  Profits first, then job growth.

Of course, this Administration believes that more government, and more regulation is better than the alternative.  Which brings us back to the oil slick in the Gulf of Mexico.  Government could not solve this problem.  President Obama’s unwillingnes to recognize this fact, rather, to pin it on the previous Administration, has convinced me that less Washington is the answer, not more.  Incidentally, government could not solve the Katrina problem either.  It was private philanthropy, including church-based organizations, that had the greatest impact during the Katrina aftermath.

It would seem that if anything, this Administration, and especially the President, is deliberately trying to keep people from focusing their attention on the economy, jobs and the fact that companies continue to shed them.  This is preferable to actually implementing policies that will create jobs, stimulate the economy, and generate revenues back to federal, state and local treasuries.

On Friday, the Labor Department will release the non-farm employment numbers for June.  Consensus estimates suggest that the economy shed 145,000 jobs this month, and if so, that the unemployment rate will rise to 9.8% from 9.7%.  Look for President Obama to do some if not all of the following:

  • Create a diversion
  • Blame it on the financial crisis and the previous administration
  • Express a need for additional stimulus

Do not expect him to take responsibility, or offer any potential solutions other than those expressed above.  This will prove to solidify Republican gains in both houses of Congress in November.  The country wants solutions and for a  responsible President.  It will have to wait another two and a half years.

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