Monday, August 3, 2009
First things first. I know that “nutball” is not one word, but it should be. Now, what was my point? Oh, yeah…
We are a consumer driven economy in the midst of one of the most serious recessions in our history. Reported unemployment is approaching 10% and that doesn’t take into account the extent of underemployment and its devastating impact on family income.
Even in the best of times, there will be some minimum level of unemployment, somewhere around 3%, associated with people who are, let’s say, temporarily between jobs. Subtracting this 3% leaves us with approximately 7% of our workforce which has been a casualty of the recession – plus the underemployed who are still working, but not making enough.
Candidate Obama promised us he would not raise taxes paid by regular people, that he would increase taxes for only the wealthiest of Americans. Now President Obama has apparently been transported into a different reality. Faced with budget deficits of biblical proportions, his closest advisors are test-marketing the potential of increasing taxes on the “Middle Class,” broadly defined to include almost all of us. (See, for example, “Geithner Won’t Rule Out New Taxes for Middle Class” by George Stephanopoulos, August 2, 2009.)
So, let me get this straight, which is what I usually say when there’s a long sentence coming… We’re a consumer driven economy in a severe recession in reaction to which the President and Congress (mostly Democrats) have spent kuh-billions of dollars we don’t have to help certain financial and automotive sector companies – which the economy would have handled just fine without our help – leaving most of the economy to fend for itself. (Break.) But now, concerned that he’s going to be presiding over the Obankrutcy of America, and that the effect of his reckless spending will have adverse consequences far beyond his one term Presidency, he’s considering raising taxes which will further curtail consumer spending and actually impede our recovery. It’s perverse Robin Hood economics, “Robin” from the many for the benefit of the relatively few.
That’s right, he’s considering raising taxes which will reduce consumer spending to help pay for programs, many of which were/are intended to slow the downturn and protect consumer spending. Hmmm?
Here’s an alternative. Stop spending so much money!! Put every dollar you’ve got directly into the pockets of the consumers who have been most affected by the recession and who will put those dollars into the economy, immediately.* Otherwise, stay out of the economy, and put major programs on hold until we can afford them. Just because you can print money, doesn’t mean you can spend it.
The impression I keep having is that of a President who talks well, but has no idea what he’s doing, who is overwhelmed by circumstances beyond his control, moving way too fast and whose naïve, overconfident intellectualism hasn’t prepared him to contend with real problems of this severity.
*If you have time, you might also want to take a look at Occam’s Economics: A simple, back-of-the-envelope plan to regenerate consumer spending – immediately, posted Thursday, July 9, 2009 on the WordFeeder.