January 27, 2010

Wake up (or shut up)

Going into tonight's State of The Union address by President Obama, one thing seems to be clear - he's going to try to portray himself as a fiscal hawk, and he will tout two things; action on jobs (to date and planned) and how this economic downturn is not his fault. Those of you still enthralled by style over substance might be prepared to swallow the Obama story whole, but my advice to you is wake up. And if you are unable or unwilling to rouse yourself from the blissful slumber that is Obama dreamland, then do the rest of us another favor instead. Rather than parroting the left's talking points, at least listen to a few facts before spouting dogmatic rhetoric. You don't really have to shut up, but just listen to a few things before you ramp up the memes again. Please.

There are two areas of contention that should be focused on at tonight's SOTU address. I'm going to put aside any reference to health care for now, because although I'm pretty sure he will mention it, discuss it or at least allude to it, I don't think it will be more than 10% of his address. I could be wrong, but I'll save that part of the analysis for the post game coverage.

The President is going to focus on two things - he's going to talk about an amalgam of the following points;

- he inherited the recession [True]
- he stopped it from being worse [False]
- he is going to focus on jobs [The question is how]
- he is going to focus on the deficit [This is outright deception]

With regard to the first point, the recession was well under way when Obama was inaugurated.  It does not reflect on him that there was a recession.  The argument that it was Democrat policies on the Community Reinvestment Act, Fannie Mae and Freddie Mac that caused the recession are even superfluous to an assessment of President Obama.  Those were not his decisions (whether he would have supported them or not).  The real concern here is not whether the recession was not his fault, but how did he deal with the crisis.  In that regard his response has not served the country well.

As supporters of the administration like to point out, the TARP program was started by President Bush, which is true.  What is also true is that (a) conservatives in large measure opposed both Bush and the GOP on the TARP issue prior to opposing Obama on it (b) President Obama upped the ante with the ARRA expenditures (his stimulus bill), the omnibus bill and tried to layer health care on top of it for another trillion dollars (c) In Bush's worst year for which figures are avaliable the total debt measured an outlandish 70% of GDP.  For fiscal 2009, for much of which the expenditures were compounded by Obama on top of the TARP issue, the figure is projected to be 90%.  For fiscal 2010 - all Obama now - it's projected to come it at 98%.  It's projected to peak at 101% before easing back to 100.6 for the 2012 election.  (d) Democrats also plan on taking the returned TARP money and plowing it back into the new jobs bill the President will proclaim tonight.

Did the President stop the unemployment rate at 8%? No, it's at 10% now and stuck in that neighborhood for the forseeable future.  The President's phoney 2 million thousands and thousands 1.5 million jobs created or saved doesn't stack up well against the 4 million new confirmed unemployed in 2009.  It's like saying never mind the car accident, if I hadn't acted we would have been mauled by a werewolf.  How do you disprove something so preposterous and yet not disprovable by any logical counter other than "I know you are but what am I?"

But there are other considerations about how President Obama fared in the face of the crisis.  He did refuse the banks repayment of TARP money.  He did then count it as debt reduction and he does plan to respend it.  That's only a little bit confusing.  But from an economic standpoint I'd have to say, foolish, misleading and then wrong-headed.  So he's got that going for him.

And then there's the fallout from his decision-making.  This is where I really take issue with the President.  Fiscal conservatism is my thing. Apparently, it's a lot of people's thing, and it's something the Tea Partiers and the reformed Republicans can agree upon.  That's where the President hopes to drive a wedge - GOP versus Tea Partiers. The speech is going to be pure political calculation.  So here's where I see the President taking his address tonight.  He's going to argue that he's got a new jobs program.  The GOP, the party of 'no', has no such thing (wait for the Republican pushed-well-out-of-prime-time reply to see that's a canard).  He's going to argue that his $15 billion spending freeze proves he heard America's message about spending over the summer and the last few months. For the math-challenged, $15 billion is 1% of the $1.5 trillion deficit for 2009.  The other thing to not is the freeze comes after artifical spending increases as part of the stimulus - so the freeze is at an artifically high level.  Charles Krauthammer explains here.

This does nothing to impact the debt-toGDP numbers below.  It's a farce.  It's a slap in the face and it's arrogant to think that people won't care or notice the fraud involved.

The purple bars show the mega-leap under the Democrat President, Congress and super majority Senate, based on legislation passed to date.  What is interesting is when the recessions are superimposed on the graph (excuse the "artwork"), you don't see the same type of recovery deficit-ballooning spending the way you do in the current recession.  Arguably the recovery would occur naturally, without the government over-reach.  But you'd never know that with all the hyperbole thrown at the recession by the White House and the media as cover for the President.  Worst recession since the great depression.  Is that so?  Highest unemployment?  Nope - that would be 1981-1982 at 10.8%.  Obama's peak was 10.2% so far.  Bigggest GDP drop? Nope 1945 was 12.7% (as a result of the government war spending coming to an end).  At 3.9% it certainly is high.  But 1973-1975 was 3.2% and 1958 was 3.1%. So certainly bad, but not Depresiion era - 26.7% worthy.  Duration? Now you're talking.  At 2 years (which is still not confirmed as the real number - that will take time), it is longer than the double dip recession of 1980 and 1981-1982.  Combined that was just under 2 years.

What's the point of the graph above?  Government spending does not correlate directly to recovery.  There are recessions that occur while government spending is dropping and ones that occur while spending is climbing.  Guess what, the government DOESN'T matter.  If they get out of the way they will allow recovery to occur. The Law of Unintended Consequences means that when the government tries to get involved, it distorts the economy, typically for the worse.  We see that here - more spending, more involvement, less freedom (Via CarpeDiem), and to show for it - more debt, and more unemployment.  That is just bad calculus by the Democrats:  Reality be damned - the agenda's the thing.

The President is going to blame Bush tonight  - Obama inherited the debt problem but he will fix it.  He's going to villify the banks, just like he did the GOP, Bush, the insurance companies, oil companies, mythical special interests, and countless others.  He figures blaming the banks and therefore taxing them to solve the debt problem, will play well in populist America.  He figures he can regain the popularity that has bled away from him by promising jobs, just like he and other did back in early 2009:

The American people have been "jobbed" alright. Obama will get away with this misdirection, if people don't pay close attention. Many people won't. For those of us who do pay attention, it's incumbent upon us to point out the hypocrisy and deceit on display. We need to shout about the truth. And we need to start doing it right away.

And for those of you who don't want to wake up, and don't want to listen either, you'll only have yourself to blame for your outcome.  Then again, as conservatives, we would have told you that anyway...

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