A few days ago, President-Elect Barack Obama acknowledged a projected $1 trillion dollar deficit for 2009, and added he forsaw trillion dollar deficits for years to come, even with any potential economic stimulus plan his administration might offer. During the campaign and since, the claim was made that these are the most challenging economic times since the Great Depression. Against this backdrop, Obama today proposed a monstrous $755 billion spending proposal, short on specifics and long on hysteria on the cataclysm that might occur should Congress not act in dramatic fashion.
Michelle Malkin is calling it the Generational Theft Act of 2009 (one which Obama is making the ultimate sacrifice of working weekends to shepherd through). It’s an apt description, as by ballooning our federal budget, which increases both the operating deficit and the long-term debt, we are literally mortgaging away our futures to gain some short-term comfort. Actually, with the current state of federal debt, a more appropriate description would be taking out a second mortgage on our futures.
To add insult to injury, Obama has created a new position for a Chief Performance Officer, to be occupied by Nancy Killefer. His reasoning is that she’ll find ways to reduce inefficiency and tax dollar waste in government – the only problem is that this is a job already done by the GAO, and he has been rightly criticized for it. Before even taking office, Obama has with these moves shown he has no problem creating more bureaucracy and bigger government budgets. Indeed, he looks to FDR and the New Deal as models for huge government spending as a fix for economic woes.
But there’s a dirty little secret about that method: economists now are beginning to believe that FDR and the New Deal actually prolonged the Great Depression. (Major props to MM for this one.) It turns out that the forced unionization and monopolies that were allowed to form contributed to the lengthening of the depression, and the massive spending programs did nothing to help. Yet massive spending is being touted as the only way out of this morass.
And there is an even dirtier secret: the average length of recessions in the last fifty years has been eleven months. I have seen other estimates ranging from 13 months to two years, but the message is the same – long-lasting depressions do not happen in the modern era, and with some estimates putting the beginning of this one at last December, we may have less than a year to go with this one. And the truth is that, even though times are tougher, we are nowhere near the Great Depression in terms of hardship. (See double-digit unemployment and stagflation under Carter for a closer approximation, and even then it wasn’t that awful).
Yet the fear tactics continue, and Obama warns that, “At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.” We saw this kind of rhetoric with the bank bailout, that if something large and drastic did not happen immediately the world would come to an end. What this is truly about is power and creating the panic necessary to ram an agenda down the throats of American taxpayers. Massive spending is not only going to fail to solve the problem, it will destroy the financial stability of this country for generations to come. Obama has shown his hand, and if he plays it, it will have dangerous consequences for the future of our nation.