The President's Frightening Speech, the Weak Republican ResponseSubmitted by LatinsforPaul on Thu, 02/26/2009 - 00:44
I must say, although the mainstream media adores Obama's address to Congress last night, I have a different opinion. I forced myself to watch it and, looking at the text again, I must say I'm somewhat startled that the president has managed to outdo his predecessor in terms of the declared faith he has in the omnipotence of the federal government.
Many have commented upon his Rooseveltian promise that "[w]e will rebuild, we will recover," but he goes beyond even FDR in his ambitious economic agenda. "It's an agenda," Obama explains, "that begins with jobs."
Echoing the in-fashion Keynesian reasoning that puts the cart before the horse, neglects opportunity costs of government growth, and stresses employment over production, Obama reiterates his vow that the "stimulus" plan will "save or create 3.5 million jobs." Aside from the economic problems, this assertion disingenuously reflects estimates based on earlier versions of the plan.
While Obama claims that "it is only by understanding how we arrived at this moment that we'll be able to lift ourselves out of this predicament," he completely misdiagnoses the problem:
"You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll."
Is this how it should be, though? Is this the foundation of the economy -- all financing is done by debt? It used to be that Americans would save, which helped them whether the Great Depression much better than we might be able to with what's in store for us. Instead of saving and production, Obama emphasizes more and more borrowing and spending.
"But credit has stopped flowing the way it should," Obama intones. In fact, the "credit crunch" of 2008 was a great hoax. Credit has plateaued, not sunk, and the fact is it should shrink more. For the economy to adjust back to reality, the policy of ever easier credit must end. It was this that brought on the business cycle and artificial boom -- as investments and spending increased at the same time, leading to malinvestment and the illusion of prosperity. We need more saving and production, not more credit.
But Obama wants to "re-start lending" with his "new lending fund" for "auto loans, college loans, and small business loans" and "a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages."
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