The Government and Economic Stimulation

In a recent interview, radio talk show host Don Imus labeled President Barack Obama as “Jimmy Carter stupid.” It was meant to define a person either so naïve or so self-righteous as to be unable to see that which is obvious. It is different than “Tiger Wood’s stupid” which refers to people who already have it all and think that a quickie with some bimbo will make it that much better (i.e. “Mutt” Lange, Kobe Bryant, and Jack Ryan).

The latest evidence of Pres. Obama as “Jimmy Carter stupid” is his recent press conference describing his intent to spend the nation further into a staggering debt as a way out of high unemployment. Apparently, the president doesn’t believe we spent enough during the initial $750 Billion stimulus — a program that was supposed to keep unemployment below eight percent — and that if we just spend more — on top of the first stimulus, the new universal healthcare program and the “cap and trade” carbon credits programs — all will be right with the world. With the reported unemployment figures still above ten percent and the real unemployment figures (including those who have given up) closer to fifteen percent, why anyone would believe that more government spending will change anything is beyond me. It is the moral equivalent of hitting yourself in the head with a hammer to make the migraines go away.

And the president is as equally vague about how the money should be spent this time around as he was with the original stimulus funds. While the president boasted that the original stimulus plan would create or save 3 Million jobs, the fact of the matter is that they cannot produce any reliable figures demonstrating that it has had any positive effect. In fact over 3 Million jobs have been lost since Obama took office. History will demonstrate that the vast majority of the original stimulus package was spent on political patronage with little care about its impact and even less on accountability. It is similar to Oregon’s Democrats spending over $700 Million on increased government employment, enhanced benefits, unwarranted raises and bailing out the gold-plated Public Employees Retirement System to reward its primary financial backers — the public employees unions. All this while private sector employment has dropped by 130,000. And in the future President Obama and Congressional Democrats are intent on raising taxes to pay for their irresponsible spending — just as Oregon Democrats are insisting on raising taxes by over $700 million to pay for their generosity to the public employee unions.

President Obama’s new “job creation” stimulus plan will work no better than his last one. The fact of the matter is that by increasing the national debt, encouraging further decline of the dollar and encouraging migration of manufacturing jobs to less hostile foreign climates, President Obama and his left wing supporters may permanently cripple America’s economy. We are in danger of becoming the United States of France — an irrelevant fop, preening, posing and acting as if our opinion counts while we frivol away our time discerning the limits of political correctness and sexual permissiveness.

Apparently, neither Harvard nor Columbia was able to teach President Obama anything about economics- or more particularly economic cycles. Recessions are caused by over supply although they can be accelerated and made worse by government interference (i.e. congressional demands that financial institutions lend money for home purchases to those without means or intent to repay them). Recessions end when the excess supply is absorbed. They are followed by periods of growth, which generally lead to over production and are followed — as day is by night — by a recession. Recessions end months, even quarters, before employment improves. The worse the recession the longer the period of time before employment improves substantially. That is because business is cautious. Government can make the recovery period worse by introducing uncertainty (i.e. universal healthcare, cap and trade, additional regulations) and by removing potential investment capital from the market place via higher taxes. (We refer to that as the Oregon Democrat Solution.)

The best thing for President Obama to do at this point is nothing. Stop talking, stop spending, and stop promising. Get the hell out of the way and let the economy adjust to five years of over indulgence and a decade or more of overspending. The economy will move as it will move. Additional interference will only delay or retard the recovery.

And similarly the best thing for Oregon to do at this point is nothing — but it comes in the form of rejecting the increased taxes that will drain billions from available capital investment. While Oregon’s current tax system does not encourage business investment or growth, the increased taxes under Measures 66 and 67 ensure that those with an investment choice will invest elsewhere and the accompanying jobs will be likewise created elsewhere.