As the recession continue to take its toll on our fellow Americans, rendering more and more of them homeless, tent cities have begun sprouting up across this great country. It would not be fair to blame President Obama for the predicament that our nation is in, but President Obama has done nothing to help the situation.
President Obama’s ‘stimulus package’ only rewarded government contractors with more spending. It is also correct to point out that former President George W. Bush’s ‘stimulus package’ did nothing more than President Obama’s spending bill.
Small businesses and the private sector in general got almost zero benefit for either porkulus spending bills. Though this recession is typical of a business cycle, there are some things that can be done to alleviate the stress the economy is undergoing and maybe expedite the expiration of the current recession. President Obama has done neither.
So it is fitting and fair to label the tent cities that are sprouting across America as Obamavilles.
(Note: In case the above YouTube video is taken down by the Blueshirts, you can see the entire story and video here.)
President Obama cannot begin his second year as president to continue to blame his predecessor for real and imagined ills of the economy.
Eventually the American people will wise up and realize that President Obama isn’t doing much of anything at all to relieve them of their dire circumstances and see through his eloquent yet vacuous speeches. They will understand that President Obama is no Harry “The Buck Stops Here” Truman who took responsibility to fix the problems he has on his desk, regardless of their origin, real or imagined.
If President Obama continues down this road of blame everyone else and take no ownership of issues, he’ll make Boss Tweed look like a shining example of prudent and moral leadership.
We don’t want another Tammany Hall Mister President. I want you to succeed in elevating America from this recession. Not take Rahm Emanuel‘s creed of taking advantage of suffering Americans by turning our country into another weak, European socialist state.
(Biretta Tip: Christopher Johnson of the Midwest Conservative Journal)
Epilogue:
The Obamaville sign in Colorado was mysteriously taken down, for the full story click here.
_._
For the KJCT News 8 story on the Obamaville sign click here.
To learn more about “Boss” Tweed click here.
To learn more about Tammany Hall click here.
To learn more about former President Herbert Hoover click here.
To learn more about the term porkulus, click here.
Perhaps this can be the campaign song for Team Obama in 2012:
I would like to know what you think Obama could have done differently over the past year.
There’s so much misunderstanding over the role of fiscal policy during this recession. It was precisely the huge expansion in the public deficit that counteracted the collapse in private demand, preventing huge negative growth rates, and equally dire employment numbers. Think of it this way: we went from a deficit of 2 percent of GDP in the balance between private income and spending shifted from to a surplus of over 6 per cent – in increase in private savings by 8 percent of GDP. What do you think would have happened without the fiscal crutch?
It’s fustrating how few people get this point. I listened last night to John King lecture Larry Summers on how government debt is exploding at the very time when households are tighening the belt. Honestly, I thought this fallacy went out with Herbert Hoover! Here’s the issue: the vast majority of the increase in debt during this recession was because of the recession (lower taxes etc). In the jargon, it comes from automatic stabilizers. You work against the stabilizers, you make the recession worse. Moxt experts quite rightly felt that the depth of the collapse in private demand justified going even further than automatic stabilizers – hence the stimulus. The standing “crowding out argument” does not work in an environment when interest rates are near zero and nobody is lending (the case of a liquidity trap).
Anyway, have a look at this post I did on what governments did right, and 4 key fallacies surrounding this recession.
Oops, forgot the link: http://vox-nova.com/2009/12/01/averting-a-meltdown/#more-11157
MM,
he vast majority of the increase in debt during this recession was because of the recession (lower taxes etc)
Don’t you think if there was less federal government bureaucracy and programs, instead of raising taxes, that we wouldn’t have gotten to this point?
MM:
Moxt experts quite rightly felt that the depth of the collapse in private demand justified going even further than automatic stabilizers – hence the stimulus.
Except as the author rightly pointed out that the stimulus didn’t do ANYTHING. Most of the money in the Obama stimulus has yet to be spent.
I supported TARP under the idea that despite that it would be mishandled, the banks needed shoring up. But make no mistake, there was a ton of corruption in TARP and even more under Obama’s stimulus.
Think of it this way: we went from a deficit of 2 percent of GDP in the balance between private income and spending shifted from to a surplus of over 6 per cent – in increase in private savings by 8 percent of GDP. What do you think would have happened without the fiscal crutch?
My guess is that if Congress hadn’t passed a stimulus the Fed would have engaged in more quantitative easing, and we’d be pretty much where we are now. I don’t think Obama is to blame for our current troubles, but the things he’s done haven’t been particularly helpful either.
It also would have been nice if they had used tax cuts, or focused a higher percentage of the spending in 2009 and 2010, rather than just handing out money to every Democratic Congressperson’s favorite pork project.
Tito – I don’t get your point. The recession was caused by greed in the financial sector. Government softened the blow …. dramatically. And by that I mean monetary, fiscal, and financial sector policy.
I reckon living in a tent in Colorado in mid winter won’t be too much fun.
MM,
This is a normal business cycle. Recessions occur every 5-7 years.
To blame anyone is like throwing darts at a dartboard.
I was just touching on the debt. Meaning that if we had less wasteful federal programs to defund the debt would be a bit more manageable.
John: I take your second point, but not the first. Multiplers are much larger on the expenditure than tax side. And I never got the whole “pork” thing — that’s the whole point of stimulus. Of course, it would be nice to get some socially worthwhile investments going (greening buildings, trains etc) but that’s not really the point of stimulus. The whole “pork” fetish is really an argument for good times – when you are supposed to be building your reserves to use them in times like this.
On the tax point, Krugman just referenced some cutting edge new research suggesting that tax cuts are a really bad idea in liquidity type situations – http://krugman.blogs.nytimes.com/2009/12/14/a-new-paradox/
Tito,
No, this was not a normal business cycle. It was the buggest global slowdown since the Great Depression. The fact that a meltdown was avoided comes from policymakers learning the lessons of the Great Depression (see the chart in my post).
On your second point, it certainly makes sense to run prudent fiscal policy in good times to store up reserves for the lean years. And the debt profile today would not look so scary if we had gone into this in good shape. But we did not – the major fiscal loosenings of the last administration were not paid for – Iraq war, tax cuts for the wealthy, medicare part D expanion. Each of these added more to the debt than any single Obama initiative, and they didn’t even pretend to pay for them.
The key fiscal challenge is that taxes are too low for teh level of desired spending. And if you disagree, you need to be willing to cut military spending or medicare – nothing else is going to cut it.
Blackadder, that’s possibly right, but (i) QE doesn’t come without cost; (ii) its success has been limited – again, it comes back to the fact that monetary policy has limited value in a liquidity trap.
MM,
I agree with you that taxes are too low for the level of desired spending.
Which to me means that we need to cut more federal programs.
We have never had an income tax at all in this country, with a couple of exceptions, until the current income tax I believe was finally imposed in 1913.
There is nothing that warrants to take people’s hard earned money.
Tito,
Much as it might hurt to admit it, MM is right here. This wasn’t an ordinary business cycle.
Tito:
(1) But what programs? As I said, you can’t do this without touching the military and medicare.
(2) Your last sentence is not fully aligned with developments in Catholic social teaching, and reflects more a laissez-faire liberalism. Remember Pope John XXII: “the economic prosperity of a nation is not so much its total assets in terms of wealth and property, as the equitable division and distribution of this wealth” (Mater Et Magistra, 1961). Powerful stuff, that!!
MM,
There’s room for disagreement on taxing hard working Americans and redistributing to the proletariat in Catholic Social Teaching.
Pope John XXIII’s teaching is not set in stone nor is it mandatory.
And by wealth he didn’t mean taxes, he meant equitable distribution, ie, opportunities to capital, resources, etc. Not take from workers and redistribute to the proletariat.
BA,
I’m not debating whether it’s ordinary or extraordinary (if I gave that impression, I didn’t mean to). But the fact remains it’s a business cycle that the socialist leaning Democratic Party is exploiting to further control our lives.
But what programs? As I said, you can’t do this without touching the military and medicare.
Means testing Medicare and Social Security would be a start.
Multiplers are much larger on the expenditure than tax side.
You will get quite an argument from some macroeconomists on that assertion.
I would like to know what you think Obama [ie the Administation and Congress] could have done differently over the past year.
1. Undertake a special audit of Citigroup, Bank of America, JP Morgan Chase, Wells Fargo / Wachovia, Goldman Sachs, Morgan Stanley, and GE Capital [?] to determine their authentic book value.
2. Erect a fund of about $300 bn to compensate defined benefit pension funds and purchase preferred stock in insurance companies as needed, as these entities are abnormally invested in bank bonds.
3. Prepare articles of incorporation for the successors of each of the foregoing. Each should have at least two successors – an ongoing business concern and a holding company which owns certain assets (illiquid securities, delinquent loans, and swaps & derivative). Citi, Bank of America and JP Morgan might have three successors: the dead asset holding company, their deposits-and-loans business, and their capital markets business.
4. Recapitalize the aforementioned banks and investment firms through swapping debt (bonds, securitized receivables, l/t loans, &c) for equity in the successor corporations. If any one corporation retains a positive book value, it should be divided between its erstwhile creditors and equity holders; otherwise, the former bondholders, &c. get the whole enchilada.
5. Call in all outstanding Fannie Mae and Freddie Mac debt and replace it with common stock. If necessary, agree antecedently to exchange the Fannie Mae and Freddie Mac bonds held by sovereign wealth funds abroad with U.S. Treasury debt.
6. Suspend collection of federal payroll taxes. Phase them back in per the performance of the macroeconomy.
7. Transfer responsibility for unemployment compensation to the federal government.
8. Institute reductions in pay and benefits for all federal employees. Compensation would be cut each quarter in step with the decline in domestic product per capita.
9. Remove all conditions on intergovernmental transfers from the federal government to state and local governments bar one: they have to cut the compensation of all public employees in their purview in step with the decline in per capita income in the country at large.
10. Legislate a pre-packaged bankruptcy for General Motors, Ford, and Chrysler which would feature compensation cuts of at least a third for the workforce and legatees in return for equity shares in proportion to losses. The bondholders might get preferred stock. In lieu of making use of TARP funding, have the Federal Reserve provide a bridge loan by purchasing their commercial paper.
11. Cut the minimum wage to $4.60 an hour.
12. Institution a mortgage modification program along the lines suggested by Martin Feldstein (with NO means testing): those whose mortgages are held by Fannie Mae, Freddie Mac, or banks held by the FDIC might apply for a reduction in the principal equal to the fall (since they purchased the home) in the OFHEO price index for their area; in return, their chattels could be attached and their wages garnished if they defaulted.
13. Institution of comprehensive tax reform as part of medium term planning for a return to fiscal balance: the elimination of deductions and exemptions, the gradual replacement of the payroll tax with enhanced income levies, the gradual institution of a component which taxes an index of one’s personal consumption, and a an enhanced per-dependent credit.
14. Introduction legislation to erect a revised financial architecture some features of which might be as follows:
a. Divestiture of subsidiaries which hold deposits domiciled abroad;
b. Prohibitions on the ownership of financial firms by non-financial firms, or (for more than a temporary period) of non-financial firms by financial firms.
c. Separation of deposits-and-loans banking from securities underwriting, proprietary trading (in securities, futures, options, &c.), ‘prime brokerage’, and private equity.
d. Separation of securities underwriting from all activities other than corporate lending.
e. Separation of proprietary trading from all other activities.
f. Separation of prime brokerage from all other activities.
g. Separation of private equity from all other activities.
h. The separation of mutual funds from retail brokerage, trust companies, and treasury services firms.
g. The separation of mid-market, corporate, and governmental lending from mortgage, farm, consumer, and small business lending. The former would be lodged in national banks which take deposits only from governments and incorporated entities; the latter would be lodged in banks which could take deposits from anyone but would constrained to operate within geographic catchments.
h. Erection of an exchange for trading in swaps and derivatives.
i. Prohibition of credit default swaps and insurance on securities.
j. Prohibition on the use of credit to purchase securities other than initial public offerings; limit the ratio of margin loans in individual portfolios to one quarter of total assets; limit the permissible leverage of hedge funds accordingly;
k. Erection an agency similar to the FDIC to act as a receiver of bankrupt securities firms and roll them up as rapidly as possible.
l. Prohibition on the securitization of receivables.
m. Turning Fannie and Freddie into self-liquidating entities.
15. Postponement of action on medical insurance UNTIL THE BLOODY BANKS ARE REPAIRED.
Means testing Medicare and Social Security would be a start.
Bleh.
MM — might want to rethink your post on health care: http://www.cato-at-liberty.org/2009/12/14/joe-lieberman-mass-murderer/
socialist leaning Democratic Party
Hillarious!!
Morning’s Minion writes Monday, December 14, 2009 A.D.
“preventing huge negative growth rates”
I have read this phrase in several places. I have not succeeded in understanding what is “a negative growth rate”. Is it shrinking?
[I make the point chiefly to illustrate that much discussion about matters economic has similar fine-sounding nonsensical phrases].