A couple days ago, I asked: If Obama really wanted to wreck the economy, would what he be doing differently? Lance Burri has an answer:
How about tariffs? Have we got much in the way of tariffs so far?
Well, no, not yet, though there were some attempts at trade restrictions in some early versions of Spendulous. And he’s made a lot of noise about them in the campaign, but no, so far he hasn’t been that Hoover like. Yet.
…is cutting back to three days a week, with a lot of layoffs and pay reductions. Same thing with Saginaw and Bay City. The Flint Journal has been around for many decades, going back to the nineteenth century, before the auto industry existed, but it looks like it’s on its last legs, as Michigan’s economy continues to swirl down the drain. A good friend of mine from college is an editor there. Hope she has a parachute.
Pethokoukis explains. This really appears to be part of a government/media war on investors.
[Update a while later]
More thoughts on the matter from Mark Hemingway:
Anyone who has tuned into his show and seen Cramer strutting around a soundstage that looks like the helm of the Starship Enterprise as envisioned by the Teletubbies’ set designer and pushing buttons that make wacky sound effects could tell you that Cramer is to stock-picking what The Daily Show is to TV news: something not to be taken too seriously.
Ouch.
He made short shrift of Geithner’s lies yesterday. Of course, he would never get the job, because he would never put up with the adminstration’s insane plans:
Gregg said the budget is essentially “putting on our children’s backs a debt they can never get out from underneath.”
He added pointedly, “I think we’re putting at risk not only our children’s future, we’re clearly putting at risk the value of a dollar and our ability to sell debt.”
…”The argument that this budget doesn’t have tax increases [on everyone] is, I think, an ‘Alice in Wonderland’ view of the budget,” he said.
He challenged the budget’s math on cutting the debt: “When you take the deficit and quadruple it and then you cut it and half, that’s like taking four steps back and two steps forward. That’s not making any progress; you’re still going backwards.”
Veronique de Rugy has a pretty scary graph of it:
The Obama administration’s budget, called “A New Era of Responsibility, Renewing America’s Promise,” estimates the deficit for this year will total $1.75 trillion. But things will get better, right? Well, according to Obama’s own ten-year deficit projections (see chart), a New Era of Responsibility produces bigger deficits every single year than during the Bush years: $1.75 trillion in 2009 to $533 billion by 2013 — this budget projects higher deficits in 2014 ($570 billion), 2015 ($583 billion), and 2016 ($637 billion). In 2019, the final year in the budget, the deficit is projected to be $712 billion.
Change! But not much hope.
Megan McArdle is regretting her vote:
Having defended Obama’s candidacy largely on his economic team, I’m having serious buyer’s remorse. Geithner, who is rapidly starting to look like the weakest link, is rattling around by himself in Treasury. Meanwhile, the administration is clearly prioritized a stimulus package that will not work without fixing the banks over, um, fixing the banking system. Unlike most fiscal conservatives, I’m not mad at him for trying to increase the size of the government; that’s, after all, what he got elected promising to do. But he also promised to be non-partisan and accountable, and the size and composition stimulus package looks like just one more attempt to ram through his ideological agenda without much scrutiny, with the heaviest focus on programs that will be especially hard to cut.
The budget numbers are just one more blow to the credibility he worked hard to establish during the election. Back then, people like me handed him kudoes for using numbers that were really much less mendacious than the general run of candidate program promises. Now, he’s building a budget on the promise that this recession will be milder than average, with growth merely dipping to 1.2% this year and returning to trend in 2010. Isn’t there anyone at BLS who could have filled him in on the unemployment figures, or at Treasury who could have explained what a disproportionate impact finance salaries have on tax revenue? These numbers . . . well, I can’t really fully describe them on a family blog. But he has now raced passed Bush in the Delusional Budget Math olympics.
Well, some of us saw this coming. It’s just a shame that the Republican nominee was John McCain. There was no good choice.
They’re just on the other side.
That seems to be the Obama game plan:
White House chief of staff Rahm Emanuel gave the game away back in November with his observation that:
“You never want a serious crisis to go to waste. What I mean by that is it’s an opportunity to do things that you think you could not do before. This is an opportunity…And this crisis provides the opportunity for us, as I would say, the opportunity to do things that you could not do before.”
Emanuel even helpfully specified the issues where the opportunity would be most helpful to the new administration – “health care area, energy area, education area, fiscal area, tax area, regulatory reform area – things that we had postponed for too long that were long-term are now immediate and must be dealt with.”
Initially, Emanuel’s disturbing words were dismissable as just his own, but the president himself and most recently Secretary of State Hillary Clinton have since repeated variations on the theme. So it is clearly the Obama strategy to use the current economic crisis as justification for his radical agenda.
Call it policy-making by perpetual crisis.
This is a not a new phenomena in the political world, of course. One need look no further than North Korea’s “Dear Leader,” with his constant invocation of the illusory threat of U.S. military invasion to keep his suffering people in their chains.
Kim Jong il is not unique, only the most bald-faced about using real or manufactured threats to justify his dictatorial policies. Other examples from history quickly come to mind, including communist titans like Stalin and Mao continually warning of “imperialist aggressors” from the capitalist West.
What is different now is that we’ve never before seen an American president so explicitly invoke this strategy of using a domestic crisis to achieve long-term domestic policy goals.
Well, I’m not sure it’s unprecedented, but it is extremely dismaying.
Carl Pham proposed an interesting thought experiment yesterday in comments, that complements mine, in which I asked what the administration would be doing differently if they were deliberately trying to tank the economy:
I bet if the entire Obama Administration and Democratic Congressional Leadership were sentenced to hang on December 1, 2009, if the stock market were not above 9000 and unemployment were not below 7%, they would become raging tax-cutting pro-business libertarians overnight.
That is, I don’t believe they are so stupid and deluded as to believe their own hogwash right down to their core. They know very well they’re hanging a millstone around the economy’s neck, costing jobs and punishing capital markets. But they don’t care. They have ambitions — more government power for themselves, better status and pay for their supporters — and they actually don’t care that a bunch of plumbers and HVAC men are going to pay for it with their jobs, 401k’s, life savings invested in the new house. Can’t make an omelet without breaking eggs, y’know.
I think it’s a good bet. Unfortunately, we won’t get to find out. Also unfortunately, the electoral consequences are far more uncertain.
[Update a couple minutes later]
Instapundit has an appropriate quote from Milton:
Chaos Umpire sits, And by decision more imbroils the fray. By which he Reigns.
We’ve always been at war with Eastasia.
[Update at noon]
As Mr. Henninger points out, this is no ordinary budget: it is a morality play in which “fairness” (note the scare quotes)is pitted against “wealth.”
…So here we are then. Our prince has come. The dragon, Wealth, has been put to the sword, and everyone is gathered downstage to await the finale. It turns out, though, that many who bought tickets thought this entertainment was a species of Romance or Comedy that had a happy ending. Others of us knew that wasn’t what was advertised and said so. I suspect this particular drama is going to have a very limited run.
I hope so. I fear that it won’t.
“Just look for the ones that are saying ‘no thanks’ to being run by Barney Frank.“
[Thursday morning update]
Related thoughts from Megan McArdle:
What to think of this? One’s first instinct is to say that this is an unalloyed good–the restrictions have made taking the funds costly enough that only truly troubled institutions will do so.
The problem is, that’s precisely what the Fed was trying to avoid. Central bankers have long made a practice of keeping it a secret who borrows from them at the discount window, because publishing the names of those who need a temporary cash infusion could trigger a bank run. In order to get the money into the banks that needed it to stave off a liquidity crisis, Bernanke and Paulson very deliberately asked banks that were widely believed to be sound to take the money too. Otherwise, the government bailout funds might have touched off the very crisis we were trying to avert.
It doesn’t do us much harm to put taxpayer funds into banks that don’t need it–we’re borrowing at low rates right now, and the banks that don’t need the money are the ones with very low default rates.
It’s also possible that some of the measures that express our collective rage at the bankers could tip the banks over the edge. It’s satisfying to make AIG cut out junkets for independent insurance agents, but it also probably means that fewer AIG policies will be sold. Since we now own the company, we probably cost ourselves money in order to express our outrage.
But it feels so good. And feelings, not thought, are what counts with the new regime.
[Bumped]
…to destroy the economy. There are a lot of other good suggestions in comments.
Seriously, if he really wanted to destroy the economy, what would he be doing differently?
[Update a few minutes later]
Now you own it, Mr. President:
The Dow Jones industrial average, actually, has reacted to Obama by plunging nearly 20 percent since he became president. That’s an obliteration of wealth that no stimulus bill will recoup. Since Election Day, the market has lost nearly 30 percent of its value—trillions of dollars, not from CEO bonuses, as you may have hoped, but from your 401(k) and the private sector.
“The stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong,” Obama recently explained.
You know, Mr. President, not everything is like politics.
The market is a forward-looking entity, indeed, but it is driven by the decentralized actions of millions of investors every second. It’s the opposite of politics. And this setup surely offends the sensibilities of the statist planners occupying Washington. Unlike politicians, markets don’t lie. And this market has been in freefall for a year.
So, what to do? Obama, who promised not to raise taxes during a recession, now plans to raise nearly $1 trillion in new taxes directly from the investor class. He plans to raise capital gains taxes (a disincentive to investment), corporate taxes (for you, the consumer, ultimately to pay) and on the “rich” (which the nonpartisan Tax Foundation estimates will affect 1.3 million small-business owners).
This recession already has passed the 15-month threshold, the historical average for downturns. Most presidents helped ease us out of those tough spots by easing the burden on Americans. Obama has engaged in the opposite. That’s his gamble.
He forgot to mention the carbon tax, which will hit everyone, including the poor, in a quite regressive manner. I really am starting to think that Barack H. Obama stands for Barack Hoover Obama.
[Update a little before 2 PM Eastern]
Aunt Nancy says $1.6T isn’t enough.
These people bring to mind medieval doctors and leeches. Except they’re the leeches.
[Late afternoon update]
From Eric Cantor’s web site:
Just three weeks after President Obama signed his ‘stimulus’ bill into law, Congressional Democrats are already conceding that it will fail to achieve its objective. As the Speaker knows, the only reason to craft a second stimulus bill would be if the first one failed. Every Republican in the House voted against the first stimulus bill because we believed that Congress could do better, and we had a plan to achieve that goal. America does not need another massive spending bill, what we need is to create jobs.
Republicans developed an innovative plan to preserve, protect, and create twice as many jobs as the bill that Speaker Pelosi rushed to the floor last month. If Democrats believe that their stimulus bill has fallen short, then we should work together on the Republican Economic Recovery Act, which would revitalize struggling small businesses, help middle-class families, and immediately rekindle America’s economy and create jobs.
Don’t hold your breath.
Holman Jenkins explains:
Mark-to-market accounting is fine for disclosure purposes, because investors are not required to take actions based on it. It’s not so fine for regulatory purposes. It doesn’t just inform but can dictate actions that make no sense in the circumstances. Banks can be forced to raise capital when capital is unavailable or unduly expensive; regulators can be forced to treat banks as insolvent though their assets continue to perform.
What happens next is exactly what we’ve seen: Their share prices collapse; government feels obliged to inject taxpayer capital into banks simply to achieve an accounting effect, so banks can meet capital adequacy rules set by, um, government.
But wait! I thought that the problem was all of the (non-existent) “deregulation” and “tax cuts” of the Bush years!
It would help if we could get rid of, or at least reform Sarbanes-Oxley, too, but little hope of that with this gang in charge.
[Update mid afternoon]
Stop favoring the short sellers.
[Update a while later]
Michael Barone: “Ad hoc Fed, Treasury Actions Caused Crisis, Not Deregulation And Tax Cuts.”
Well, duhhh. But reality didn’t fit the Messiah’s message.
Tom Maguire on Jane Hamsher’s economic ignorance and Stalinist impulses.