PrintFebruary 3, 2009
Inmates in charge of the asylum in DC
The reviews are in and Barack Obama seems to have laid a big fat egg -- on Wall Street anyway. In all fairness, the President cannot be held responsible for all the turmoil afflicting the stock market and the American economy. The crisis did precede him. But we were promised that an Obama presidency would restore our economy; the campaign was all about hope and change. Change is happening but not the hope. How do we know this?
Wall Street and businesses look ahead-stock prices reflect the future value of companies; businesses hire to prepare for the future. Conversely, when stock prices collapse (the Dow is down nearly 9% since the New Year began, the S&P 500 about 8.6%) and companies lay off workers (almost 600,000 and counting since Barack Obama won in November), hope is just not happening. It is just a word, after all.
Why?
I won't linger over the policies being promoted that send a clear message: free enterprise is on the endangered list. But a brief recap might help to explain why I have this prognosis.
The "stimulus" bill will not stimulate the economy. Very few of the dollars being spent (borrowed -- to be paid back by us and our descendants ‘til kingdom come) will go towards infrastructure spending or the types of targeted measures that help business grow and hire workers. Instead, Nancy Pelosi and company have larded up the bill to please a swath of Democratic special interest groups, including members of a politically powerful union with close ties to Barack Obama and the Democratic Party.
The bill is, as Ben Stein characterizes it, an exercise in the "politics of payoff":
The new kind of politics of hope. Eight hours of debate in the House of Representatives to pass a bill spending $820 billion - or roughly $102 billion per hour of debate.Only 10 percent of the "stimulus" to be spent on 2009.Close to half goes to entities that sponsor or employ (or both) members of the Service Employees International Union, federal, state, and municipal employee unions or other Democrat-controlledThere has been pork-barrel politics since there has been politics, but the scale of this pork is beyond what had ever been imagined before -- and no one can be sure it will actually do much stimulation.
Very few dollars will go towards stimulus as it is commonly understood, though it was clever of the Democrats to use that metaphor. It sounds more palatable than, perhaps, America's Largest Earmark Bill Ever, or the Most Generous Welfare Relief Bill Ever.
But, Americans aren't buying it; support for it is falling (58 percent of the American people now oppose the package) as more of those devilish details come to light (sexually transmitted disease prevention, for example); 50 million dollars for the National Endowment of the Arts; 2 billion dollars for the national parks that may be a payoff to the son of a powerful Democratic Congressman on the Appropriations Committee whose company will benefit from all that green; 150 million to the politicos favorite museum, the Smithsonian; 400 million for global warming research; 2.4 billion dollars for carbon capture projects; 650 million for digital TV conversion coupons; Hollywood, which is doing fairly well these days, even gets a big goodie, presumably as a reward for all those campaign dollars sent the way of the Democrats ). ACORN, which is close to Barack Obama and many other Democrats, and tarnished by sit ins and voter fraud, looks to be a winner.
The "Buy American" requirement, helpful to unions, in the stimulus bill threatens to spark a trade war with other nations. Headline from the London Daily Telegraph
"US-EU Trade War Looms As Barack Obama Bill Urges "Buy American". .
This provision likely violates World Trade Organization rules and is, of course, inimical to the free trade that has helped our nation (and world) prosper. We have tried to Smoot-Hawley our way out of economic doldrums before; it did not end well (prolonging the Depression and worsening international relations. Some even believe it might have helped cause World War Two). In any case, the Democrats seem to have already burned some goodwill with the rest of the world.
As more people dig through the pile of paper one thing is increasingly clear: the government will be hiring a slew of people. These people will find their paychecks depend on keeping Democrats in power. This is Chicago patronage politics writ large. A large government payroll must be met somehow: that is one reason why Chicagoans labor with the highest sales tax in the nation.
More taxes are coming your way.
President Obama's first few days in office were used to sign a series of executive orders that empower unions. He has welcomed them back into the White House after eight years (an applause line that worked well with his audience of union supporters last week) and took a series of measures that please them. Adriel Bettelheim of CQ Staff noted
One order requires government contractors to offer jobs to qualified employees when contracts change.Obama also undid a Bush executive order that required employers to post signs informing workers of their right to limit financial support of unions serving as their collective bargaining representatives.A third directive prohibits government contractors from being reimbursed for expenses incurred trying to influence workers on whether to form unions or engage in collective bargaining.
Regarding the first order signed, Mickey Kaus points out a basic consideration: what if the former employees "suck" and that is why the business was sold. Will the new buyer be stuck with bad employees? Yes. These orders will likely slow business turnover and efficiency. No wonder Kaus calls the orders the "labor payoff of the day". .
The first bill President Obama signed into law was the Lilly Ledbetter Fair Pay Act, an act that will make it easier for women to sue employers for pay discrimination by extending the statute of limitations. On the face if it, this may please many people. But it is can be very difficult to determine if jobs and performances on the job are comparable. Especially if many years have passed. That is one reason why opponents contend the bill would gut the statute of limitations and benefit trial lawyers by encouraging lawsuits.
The payoff to unions and to labor has just begun. Adriel Bettelhei of CQ wrote:
The executive orders were a bow to labor groups that overwhelmingly supported Obama during the election and are expecting his administration to make significant policy changes on its own and to support pro-labor legislation.The labor wish list includes reconstituting the National Labor Relations Board, which took a pro-business turn under the Bush administration, expanding family and medical leave, and enacting labor law changes to make it easier for employees to unionize a workplace.
Democrats and the media have distorted the facts underlying the law, writes Stuart Taylor at The National Journal:
These measures seem likely to make it harder than ever for employers to defend themselves against bogus (as well as valid) discrimination claims, effectively adding to the cost of each new hire.This would be justified if job discrimination were indeed pervasive. But the evidence suggests otherwise. Study after study has, for example, cast grave doubt on what appears to be the myth that sex discrimination in the workplace remains rampant more than 40 years after Congress adopted one law broadly banning job discrimination and another requiring equal pay for women and men doing equal work.Congressional Democrats, liberal groups, and the media have thoroughly distorted the facts underlying the Ledbetter law to advance their agenda of opening the door wide to all manner of job-discrimination lawsuits.
Get ready for more bills to come, Taylor warns:
Another bill that may reach President Obama is the House-passed Paycheck Fairness Act. Its confusingly worded amendments to the Equal Pay Act of 1963 seem designed -- or at least likely -- to force pay raises for women who have never been victims of anything that most people would call discrimination.The bill would, for example, expose an employer to liability for paying a woman less than a man in a similar job unless the employer can convince a jury that the differential is "job related" and "consistent with business necessity" -- and also that no "alternative employment practice exists that would serve the same business purpose."What's that parade of nebulosities supposed to mean? I think it would invite judges and juries to go beyond providing remedies for real discrimination and to play Robin Hood by second-guessing justifiable pay disparities. It would force some employers who are entirely innocent of sex discrimination to settle unwarranted lawsuits.
Jennifer Rubin adds:
Throw in unlimited compensatory and punitive damages and plaintiff-friendly class action rules and you have a trial lawyer's dream and an employer's nightmare. Aren't we supposed to be making it easier to hire and employ American workers?
After all, President Obama has said ""I don't view the labor movement as part of the problem. To me, it's part of the solution".
Has that been true regarding the United Auto Workers Union that has helped to cripple our auto industry that now is being bailed out with our taxpayer dollars? The Teamsters with a storied history of mob involvement? Teachers unions who fight the charter school movement and oppose vouchers that would inject some competition in the educational industry. (The biggest monopoly Democrats support is that of the educational industry), protect incompetent teachers from being replaced and impose layer after layer of managers, instead of teachers, on school districts across America? Transit unions in NYC that defied state law and helped to cripple New York City's economy in the past and periodically hold the city hostage? Has that been true of the Service Employees International Union, which is rife with problems of corruption and political peddling and meddling, especially on behalf of Barack Obama?
President Obama's choice for Secretary of Labor, Hilda Solis, was a big win for labor unions, as well.
Solis has described herself as a "daughter of a union family," co-sponsored the Employee Free Choice Act in the 110th Congress, and earned a 100% rating from the AFL-CIO last year.For more, take a look at Holis' EFCA speech on the House floor, and her position page on labor issues from her campaign website, which shows her taking a strong pro-union message on pretty much every issue important to labor.
We will be hearing a lot about The Employee Free Choice Act. This is the Orwellian name for what is otherwise known as the "card check" method for organizing employees into a labor union. The bill eliminates the right of workers to vote privately on whether to join a union. What is not often appreciated is that the bill has other measures that are inimical to free enterprise and would further government's encroaching into the arena of private businesses. .
We can expect an endless number of environmental and global warming initiatives that will make America an unwelcome environment for business in the years to come. Already, President Obama has given states the right to set their own emission standards for vehicles (creating a multiplicity of standards or requiring car companies make cars that satisfy the toughest state standard, even though President Obama acknowledges this will impose huge burdens on an already ailing industry. .
Does anyone actually expect Barack Obama to appreciate free enterprise? He never ran a business. As a community organizer, he had no truck with free enterprise. His cabinet choices reflect his agenda at work: devoid of anyone with executive business experience. Not a one.
He is getting a good start on killing private enterprise. Businesses will increasingly hire overseas workers and establish plants in friendlier climates. Already a number of companies have or are in the process of establishing their headquarters overseas -- Ingersoll-Rand, Covidien (a medical supplies company). Europe or Asia, here we come.
But what has been most surprising is the vehement criticism President Obama has hurled at Wall Street and bankers. He has called bonuses paid to Wall Street employees "shameful" even though much of this bonus money was spread over the vast number of employees on Wall Street and not just traders. He also does not appreciate that compensation on Wall Street is very different from compensation in other industries: most of the reward comes from bonuses at the end of the year, not salaries during the year. Forgotten is the fact that the bonus pool fell a dramatic 44% last year and that thousands of employees are being fired.
President Obama then turned up the heat, and not just in the White House. On Saturday morning, he continued his attack, saying that the "American people will not excuse or tolerate such arrogance and greed". This is rich with irony if not hypocrisy. Barack Obama was the top beneficiary of Wall Street/hedge fund money during his campaign, beating out Senator Christopher Dodd (see below for more on Dodd). George Soros, the hedge fund billionaire, was one of Obama's earliest and most enthusiastic supporters. Soros made billions over the last couple of years of economic turmoil he benefited from and may have exacerbated the collapse . Do you think we will hear any criticism of this "owner" of the Democratic Party, as Saturday Night Live depicted him?
A funny thing must have happened on the way to the White House: Barack Obama found the straw men and whipping boys he needed to demonize (Saul Alinsky would be proud).
Trash talk might be fine on the basketball court but is not Presidential. The campaign is over; a President needs to inspire and lead. Perhaps his messianism has gone too far and he sees his role as akin to chasing the moneylenders away. It seems to be working, and not just on Wall Street, but on Main Street as well. Who would invest when it is becoming clearer by the day that an anti-business left-wing ideologue now has his hand on the tiller.
Other leading Democrats are adding fuel to the fire.
How else to explain the stunningly irresponsible commentary we have heard over the last few months from Senators Schumer, Reid, Dodd and McCaskill?
Senator Schumer was accused last year of triggering the collapse of IndyMac, a major bank in California, by publicizing a letter he sent to federal regulators questioning the soundness of the bank. A classic bank run followed, leading to the bank's collapse. The head of the Office of Thrift Supervision pointed a finger at Schumer:
On Friday, regulators specifically fingered Schumer for IndyMac's failure. The Office of Thrift Supervision said in its statement announcing the seizure that "the immediate cause of the closing was a deposit run that began and continued" after Schumer went public with his concerns
Senator Reid, almost as well-known for loose lips as Vice President Joe Biden, single-handedly was responsible for a massive sell-off of insurance stocks one day last year, when he said that the financial system bailout plan was crucial because a large insurer was at risk of failing (this was after American International Group was bailed out). Reid specifically cited "a major insurance company -- one with a name that everyone knows -- that's on the verge of going bankrupt," according to Dow Jones Newswires.
Guess what? The stock prices of insurance companies collapsed that day. The next day, Reid backtracked. His office released a statement that Reid was not personally aware of any particular company being on the verge of bankruptcy" and that "he has no special knowledge about nor has he talked to any insurance company official" . This the Senator Majority Leader. Incidentally, no insurance company has collapsed since then, either.
Senator Dodd also attacked Wall Street bonuses:
"I am urging -- in fact, not urging, demanding -- that the Treasury Department figures out some way to get the money back."
Will that include the donations made to you by your many friends on Wall-Street, Senator? You are known as a Wall Street-friendly politician. I guess they won't mind being thrown under the bus for the sake of some political points. That is what friends are for.
Not to be outdone is the freshman Senator from Missouri, Claire McCaskill, an early and ardent supporter of Barack Obama's presidential run. She joined in the fun:
"We have bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer. ... They don't get it!" .
The penchant for irresponsible comments is working its way downward. The new Secretary of the Treasury, speaking for the Obama Administration, engaged in China-bashing over currency issues during his confirmation, prompting further turmoil and a dramatic fall in the dollar and rise in the price of gold. The Wall Street Journal commented:
This would seem to be an especially crazy time to undermine the dollar, given that the Treasury will have to issue some $2 trillion to $3 trillion in new dollar debt in the next couple of years. A stronger yuan would also contribute to Chinese deflation and slower growth, which would only mean a deeper world recession.If the Obama Treasury is now going to take that step, hold on to those gold bars. We're in for an even scarier ride than the Fun Slide of the last few months.
Demonizing businessmen is not the way to encourage investment and hiring. Free enterprise should be seen as a partner; not an enemy. Mistakes have been made-no doubt. Yet free enterprise has also created the wealthiest nation on earth, where dreams can come true.
Will Washington Democrats continue the auto de fe? Will free enterprise continue to suffer attack after attack politically, legally, and rhetorically? Who will suffer in the end? The rich will hide their money. Companies will relocate.
The ones who will truly suffer in the end will be American workers who will be stuck in an economy that will mimic the sclerosis that set back European nations that followed many of the same policies that President Obama and the Democratic leadership apparently desire. Ironically, those nations have realized the errors of their ways and are trying to undo the same type of policies Barack Obama is promoting. They are finding it hard to dig themselves out of the hole -- as will we in the years to come.
Will George Bush be blamed for years to come? How long will that shtick last? Charles Krauthammer gives it a lifespan of six months; then Obama takes responsibility for the economy. President Obama does not appear to like the sound of that. He seems to have absolved himself of any responsibility to cure the problem in any reasonable time frame. He lowered the bar for himself, predicting that the recovery will take years, not months. That statement will not help the economy. Who would invest when our own President has so little confidence in the future?
President Obama seems to have a history of blaming others for his slip-ups, as ABC News' Poltical Punch blog satirized during the campaign in a piece titled "Obama's Inability to Hire Good Help Rears Its Head" noting a lengthy list of problems on which the candidate passed the buck onto staff members.
We heard a lot about hope during the campaign; what we got was anger. What is coming is despair.
Ed Lasky is news editor of American Thinker.
