Unprecedented Fearmongering
Anytime President Bush warned us about being vigilant as we fought the terrorists, Democrats would chastize him for playing on people’s fears. It’s to be expected, though, that these same Democrats aren’t critical after President-Elect Obama delivered a speech that’s mostly fearmongering with a tiny hint of optimism. It’s impossible to miss the pessimism in his opening:
We start 2009 in the midst of a crisis unlike any we have seen in our lifetime, a crisis that has only deepened over the last few weeks.
Nearly 2 million jobs have been now lost. And on Friday, we’re likely to learn that we lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs.
Manufacturing has hit a 28-year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear. And many, many Americans are both anxious and uncertain of what the future will hold.
Now, I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years.
The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four.
“We start 2009 in the midst of a crisis unlike any we have seen in our lifetime”? You can tell President-Elect didn’t pay attention in the 1970’s. If he had, he would’ve known that this recession isn’t as scary as the Carter economy, when unemployment reached double digits, home mortgage rates were in the mid-teens and inflation skyrocketed. I wonder if he knows that the misery index reached its all-time high of 21.98 under Carter’s watch. I wonder if Obama knows that the misery index is obtained by adding the inflation rate to the unemployment rate. It’s possible he doesn’t.
It’s impossible to believe that it isn’t part of President-Elect Obama’s strategy to engage in fullblown fearmongering to get his pet spending projects done. It’s especially difficult to believe that fearmongering isn’t his intentional strategy considering Rahm Emanuel’s spin that “We shouldn’t let a good crisis slip away.” Everybody thinks that these are challenging times. People aren’t pretending like everyone’s sharing in a wave of prosperity. We get that we’re experiencing difficult economic times.
Nonetheless, we shouldn’t be in full panic mode, either.
Running $1,000,000,000,000 deficits is the fastest shortcut to skyrocketing inflation. What’s worse is that a $1,000,000,000,000 deficit for FY2009 might be on the low side:
The Congressional Budget Office released its latest budget forecast yesterday, and we now really do have red ink as far as the eye can see. Thanks to a 6.6% decline in revenues due to recession, a spending increase of some $500 billion or 19%, and assorted federal bailouts, the U.S. deficit for fiscal 2009 (ending September 30) will nearly triple to $1.19 trillion. That’s 8.3% of GDP, which CBO says “will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983.” It certainly blows away any deficit this decade, not to mention the Reagan years when smaller deficits were the media cause celebre.
But there’s more. None of that includes the new fiscal “stimulus” that President-elect Obama has promised to introduce upon taking office in two weeks. The details aren’t known, but Mr. Obama and Democrats have been talking about at least $800 billion, and probably $1 trillion, in new spending or various tax credits and reductions over two years. Toss that in and add more expected bailout cash, and if the economy stays slow the deficit could reach $1.8 trillion, or a gargantuan 12.5% of GDP.
Having the first deficit in excess of $1,000,000,000,000 is bad enough. Having the first deficit approaching $2,000,000,000,000 is downright frightening. It’s also irresponsible.
There is one thing that President-Elect Obama said that I agree with:
We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability. Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve. The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.
It’s true that we reached “this point due to an era of profound irresponsibility” that stretched into “the halls of power in Washington, DC.”
That’s where Maxine Waters said that Fannie and Freddie were doing great “under the outstanding leadership of Franklin Raines.” That’s where Barney Frank said that he didn’t “see anything in here that the safety and the soundness are at issue…” That’s where House Democrats that control the banking committee too huge campaign contributions from their friends at Fannie and Freddie.
It’s laughable, though, to hear President-Elect Obama say this:
Politicians spent taxpayer money without wisdom or discipline.
Any politician that will have a $2,000,000,000,000 deficit isn’t spending taxpayer money with wisdom or restraint. In fact, I’m betting that the final version of this bill will be filled with more ‘Christmas ornaments’ than the last Transportation Bill.
It’s insulting to hear Obama gloss over the Fannie/Freddie crisis by saying “Banks made loans without concern for whether borrowers could repay them…” Banks didn’t just make loans without concern for whether the borrower could repay the loan. Legislation was passed during the Clinton Administration that forced banks to make bad loans.
It’s becoming quite apparent that Mr. Obama is skilled in the Democratic art of ‘Chicken Little’s the Sky is Falling’ pessimism. It’s unfortunate that someone who campaigned on a theme of “Yes, We Can” didn’t say that he really meant “Yes we can if the government spends unprecedented amounts of money.”
Technorati Tags: Stimulus, Budget Deficits, Maxine Waters, Barney Frank, Fannie Mae, Freddie Mac, President Obama, Fearmongering, Pessimism
Cross-posted at LetFreedomRingBlog
January 9th, 2009 at 4:36 pm
This world financial crisis is entirely the fault of Democrats, especially Barack Hussein Obama. By raising these fears, Barack Hussein Obama is showing that unemployment is at the lowest levels since the 1940s and that the stock market is indeed continuing to plummet when it’s obvious that the American financial system is as strong as ever.
If only McCain and/or Palin were president, this economic crisis would be solved by now because McCain and Palin have proven their experience. McCain in suspending his campaign and Palin for rejecting the Bridge to Nowhere. In a situation like this, McCain would suspend his presidency, giving Palin the opportunity to suspend the stock market from falling any further.
Instead, we get Barack Hussein Obama, who has the audacity to make people think their jobs and American’s future is in jeopardy because of this so-called crisis. There’s no such thing as trouble for a country as great as America and we don’t need this phony telling us what he ‘thinks’.
Thank you Gary for such an amazing article.
January 9th, 2009 at 4:56 pm
Funny how your perspective has changed… now that the Democrats are back in control. Oh, if only it weren’t so unexpected.