Our Country Crumbles

A so-called "stimulus" plan will pass that even Joe Biden acknowledges may not work but the Vice President somewhat generously places the scheme's odds for success at seventy/thirty. Obviously, Joe couldn't make it setting the line. It looks like we have a second-in-command who is not quite as bright as the neighborhood bookie. This bill is actually an impediment to recovery and an invitation to unprecedented inflation. We perhaps should not be heartened by the fact that the ancient Paul Volcker is one of Obama's close economic advisers because although the former Fed head clearly recognizes the dangers of inflation, his cures of twenty percent interest rates under Carter were about as bad as the disease. The recession would ultimately have been ended as a function of the markets had they been given a chance to work, but the intervention that is taking place poses a great hazard, prolongs the misery, creates more institutional obstacles to normal market function, and ultimately pushes the nation away from free market capitalism and into the camp of command economy socialism which has never worked anywhere on earth that it has been implemented. Capitalism rewards risk, work, and initiative, socialism punishes these attributes. I will lay odds with old Joe and parlous Paul (Volcker) that the plan emerging from Congress to save the economy has zero percent chance of success unless that is defined as forever altering the nation as we know it.

Recipes for Disaster

Obama's plan for a green economic recovery began to emerge today. Far from creating burgeoning recovery, this plan will throttle the private sector and thwart real, sustained growth. Part of the plan will be to green two million homes. People worrying about where their next meal is coming from aren't going to be overly concerned with solar panels. What is needed is a lower capital gains tax, lower marginal tax rates or a flat or fair tax or a national sales tax with Federal income tax eliminated, and Bush's other tax cuts made permanent. Corporate taxes could be done away with to end double taxation. No wage or price controls are needed. No massive New Deal-style WPA programs need to be initiated. The private sector will create plenty of jobs if America lowers the capital gains tax rate which is already the second highest in the world or eliminates capital gains tax altogether. Energy supplies need not be green just cheap and reliable and this could be accomplished by allowing more oil drilling domestically and more refineries to be built, clean coal-fired plant construction and new nuclear plants. Jobs would thus be created in useful public projects rather than make work. Boutique-blend gasoline, now tailored with dozens of specific blends forced to be sold in different areas, should be eliminated with one standard across the country to enable refineries to produce a consistent fuel available everywhere and with lower costs associated with not having to duplicate effort. The fourteen(14) states that Obama is going to allow to mandate their own air-quality standards will only put paid to the American automotive industry as private enterprise just as having different weight and measure standards would make it impossible to operate business across state lines. Another formula for international disaster is being propounded by Jimmy Carter who simply refuses to recognize that good and evil exist and that the world's jihadists will stoop to any degree of savagery and barbarism to defeat the West. Israel is one of the front lines in the battle against Muslim extremism which is only willing to make temporary compromises to advance Jihad and has absolutely no interest in enduring peace. Carter, who unleashed this demon by not backing the Shah of Iran and permitting the rise of the Ayatollah Khomeini, does not see any moral distinction between those who seek to live in peace with all their neighbors and those who would gladly cut their neighbors throat because the neighbor would not adopt Islam. Judaism does not seek to convert anyone, has never converted by the sword, and does not murder people for apostasy. The Iranian Shias are caught in an end-time cult that wants to bring back the Mehdi by sparking destruction and chaos similar to that envisioned in the Book of Revelations, and the Sunni Wahhabis, who spawned al Qaeda and gave us Bin Laden, will use all measure of violence to convert or kill those who believe differently. Jimmy Carter is no innocent abroad, he is an active ally of evil who seems to hold the same particular disdain for Jews that his brother Billy did.

Collapse Is Inevitable

The bell is tolling for the US economy and any bailout now will only postpone the day of reckoning. Only after bad debt and economic chicanery (as in Madoff) are purged and the catharsis of cleansing takes place can true recovery begin. Until then, TARP and the automobile company (UAW) bailout are forestalling catastrophe but in so doing, feeding inflation with the potential even for hyperinflation approaching levels of Wiemar Germany or Zimbabwe. The financial institutions simply could not be allowed to fail because they underpin the entire economy. The financial system had to be buttressed to sustain all the other industries which were contingent on it. Inconsistency in saving some firms but allowing others, as in the venerable Lehman Bros. to fail, fed the instability. Markets need predictability and investors can't afford chaos. Foreclosures are in some cases the sole fault of the borrowers, but other unwary home buyers were duped and deserve some consideration from government. As for GM and Chrysler, they had such legacy costs that the UAW had to make concessions. There may be a case for some level of protectionism where currency manipulation as in the Chinese Yuan has taken place and where the American worker faces competition from what is essentially slave labor. Automotive workers and others laboring in manufacturing can and should not be expected to work for slave wages such as those provided by companies in China, Vietnam, and even Mexico. The green and New Deal-type measures Obama is proposing have no prospect of bringing the nation out of recession and Obama's suggested tax cut is too small and directed too narrowly to cure what ills.

Foolish Fiscal Fantasy

Obama wants nearly a trillion dollars to stimulate the economy in addition to the seven hundred billion already appropriated for the Paulson plan. The government can not even precisely account for much of the three hundred fifty billion dollars already spent. Obama's premise of a surge up prosperity as opposed to a David Stockman/Reagan style trickle down can not work. If the poor knew how to spread prosperity through industry and entrepreneurship, they would not be poor in the first place. The only job creation occurring will be the growth of government jobs. Low and middle income people with ambition, ability, and substance have not remained static in the capitalist America of the past. They have enjoyed incredible upward mobility and not because of a five hundred or thousand dollar government stimulus check. If a person were not satisfied with his station in America, it was possible to rise above it. The US is not Victorian England where people were hidebound by class. Just look at all the Asians who have come here with nothing and within a few short years end up owning a business and within a generation have their children enter the professions. They did not come here to sign on to the dole. Obama's plans from energy with massive expenditures on greening fuel with international demand for gasoline drying up making it very affordable, to medicine, to give free care (that is free for the recipient but glaringly expensive for the taxpayer) to dependent children up to age thirty(30) will at best bring us an extended recession under Northern or Middle European-style socialism. At worst, the US may find herself in an unending depression with entrenched Democrats cum Marxists running most every aspect of American lives.

Tax Cuts Work

Obama has proposed $310 billion in tax cuts. Depending on what other taxes and fees he raises, and if he allows the Bush tax cuts to lapse or actually passes legislation to curtail them even sooner, the cuts have a chance to stimulate the economy. The amount is relatively modest considering the recent surge of Federal bailout spending, but it sure beats a 300 billion dollar tax increase. Then again, massively growing government with 600,000 new Federal hires, raising taxes on the high net worth individuals who own businesses and do most of the job creation in the private sector, and saddling industry with burdensome regulation may negate any benefit the tax cut could create.

Budget Busting Behemoth

Obama will get his trillion dollar stimulus. Blue Dog Democrats will serve as loyal lapdogs and only a handful of Republicans will voice objection to such unprecedented and massive spending. They will be called obstructionists by the dinosaur media and will be blamed for every drop in the markets. Those who oppose the new President will have to hear from angry constituents who will mostly be union members, government workers and their families, and computer-generated complainers brought in by Obama's tech-savvy acolytes who will magnify Obama's support far greater than it actually is. Obama's victory will be termed a mandate and only the most courageous will stand to oppose him. There will be few voices talking about passing deficits of previously unimaginable magnitude to our grandchildren or about how our currency is being completely devalued. There may be a brief token filibuster or short legislative hold placed on the Obama bill but passage is ultimately inevitable.