PrintApril 6, 2009
We Can't Afford It, Mr. President
Polls show that the public is both nervous and angry as political leaders throw together massive financial bailouts. We instinctively know that high levels of public debt are dangerous for our future whether we voted for Obama or McCain in November.
Concerned citizens want a sustainable recovery we can believe in not an inflationary quick-fix. We cannot have confidence in economic stimulus and bailouts that look, sound and smell like a giant Ponzi scheme.
We have to begin by stipulating that government and many companies and individuals have been living beyond their means for quite some time. There was too much borrowing from Peter to pay Paul. Suddenly Peter was tapped out. There was the inevitable short fall and the system came down like a house of cards.
Whether the U.S.S.R. in the 1980's or the United States in 2009 there are some basic principles in play that do not discriminate. Undermine personal responsibility and initiative, expect a "free lunch" or provide them, spend money you don't have on things you can't afford and you have the universal formula for disaster. The facts of life are conservative. Trying to game these principles threw the U.S.S.R. on the scrap heap of history. The U.S. is now looking its own future in the face. Pursuing policies that got us into this mess might give us a short lived reprieve but will only delay the inevitable.
Policies and actions consistent with living within our means and being held accountable for good and bad decisions in every sector of the economy are necessary for a sound recovery. Responsible voters and taxpayers instinctively understand the concepts of maintaining reserves against risk and paying as you go. It does not require an Ivy League education.
Our politicians have sought to mute concerns about government borrowing and profligate spending by requiring a shrinking minority of U.S. households to pay federal income tax while increasing the number of government jobs. Obama's goal is that a mere 5% would pay most of the taxes as he increases public employment via the health, education and energy sectors. The word socialism is beginning to creep into our kitchen table / internet conversations.
Homebuyers both rich and poor who are paying their mortgages on time don't feel it is fair to bail out buyers who bought property they couldn't afford. The trillions Main Street has given up in retirement savings plus what the bailouts for Fannie Mae, Freddie Mac, A.I.G., the banks, consumer lending businesses and the auto industry may cost could bankrupt the U.S. economy. There is no "free lunch." Main Street is buying lunches for government cronies on Wall Street and our neighbors. We don't like it and we can't afford it.
A political /economic system that is perceived as corrupt, unfair and incompetent is ripe for abuse and will get no respect. Soviet citizens used to say before their country collapsed, "the government pretends to pay us and we pretend to work." The Soviet Politburo was infamous for its 5 year economic plans that produced nothing.
In the end, unable to put food on the table, bogged down in a losing war in Afghanistan and having to hire foreign contractors to get anything produced or built, the awesome power of the Kremlin could do nothing to inspire prosperity. Soviet politicians and their cronies lived well while citizens were warehoused in huge, unheated apartment buildings. Thanks to government planning every bit of productivity dried up in a country rich in workers, land, and natural resources.
People are hopeful the Obama administration will bring competence and fairness back into our political and economic culture. That hope is starting to erode. The Congressional Budget Office (CBO) predicts that at the end of Obama's ten year planning cycle government debt will equal 82% of the value of all goods and services produced in the U.S. in 2019. Massive borrowing and spending to stimulate the economy will only serve to put us further under the heel of the Chinese and other malefactors of our debt. We fight expensive wars in Iraq and Afghanistan against drug lords, gun runners, and criminals while our own borders are breeched with impunity daily by the same kind of bad actors.
President Obama is tentative about both closing down our foreign wars and securing our borders though he is willing to aggressively increase government spending. So far his policies aren't much different than President Bush's. Bush supported government take-over of Freddie Mac, Fannie Mae, A.I.G. and Citibank under the TARP rescue. Obama voted for TARP as Senator. As President he advocates government deficit spending coupled with tax and fee increases to create jobs and secure the losses of defaulting global corporations. These policies will kill the productivity necessary for recovery.
When governments own the economy, you wind up with either crony socialism or crony capitalism. Neither is fair or sustainable. Lean, mean markets subject to effective and enforceable oversight with safeguards, such as adequate FDIC savings insurance and pay as you go requirements for all creates a system that can deliver. Businesses that don't work should go out of business.
The people have to act. Let us give clear, simple direction to Congress and the President. A Main Street citizens' petition for economic recovery must direct Congress to vote no for expenditures it can't pay for. Vote yes to let the market drive job creation. Vote yes to unlock our natural resources for the benefit of all. Vote yes to stop government from further private market investment and manipulation.
The only way a private business becomes too big to fail is through government subsidies and protection. The failures and subsequent rescues of Wall Street define crony capitalism.
Government needs to get back to providing consequences for crooks and swindlers. Business needs to provide goods and services that the market wants. Consumers need to keep their spending limited to what they can afford. Voters need to direct their political representatives to live within the revenues provided, create tax policy that incentivizes productivity and provide a safe environment for the rest of us to go about our business.
