Wednesday, March 25, 2009

Okay, this is going too far.


For the record, I have been tolerant of, if not flatly supportive of, the stimulative and budgetary measures taken by the new Obama administration to this point. I have felt that these spending measures, though Keynesian-esque, were necessary in the face of the second of our two current crises (the severe downturn in the real economy). I agreed that immediate, albeit artificial and rightfully temporary, demand by government was useful in filling a void left by debilitated private-sector demand. And I still stand by that thought. (Note: Tim Geithner proposed a portion of the right solution for the first of the two crises (the utter collapse of the financial sector), yesterday, with his call for creating public-private investment funds. A plan which I've addressed on my blog.)

All of this say, however, given the current state of our economy and the fact that we are teetering on ruination, it is fundamentally difficult--no, gravely impossible--for me support the thrust of President Obama's 2010 budget submission before Congress. The plan is perhaps one of the most audacious attempts in modern history to fulfill a litany of campaign promises in one year, standing at a cost of $3.6 trillion. With everything from health care and education reforms to alternative energy incentives, and even his signature middle-class tax cut (possibly), President Obama has signaled without equivocation his intention to move spritely forward with an agenda that his party has come to interpret as the mandate for his election. However, there is only one problem with their efforts to proceed: no matter how right he and his fellow partisans might be about a mandate, and no matter how warranted some of these programs might be, no one--not even this writer--can ignore the fact that there is no money left in our government's coffers for any of this crap now.

Ours is an economy in shambles, wrecked by dual crises--the first, a financial collapse based on bad lending and over-leveraging, and the second, a real-economy downturn rooted in widespread demand destruction. Both events, neither mutually exclusive, have left commerce weaker, businesses shuttered, homes foreclosed, and people impoverished. Therefore, it would be illogical for anyone to assume that the American people could take on the burden of this new budget, inasmuch as the net result of the recession has been fewer dollars flowing from Joe Taxpayer to O'Slimmy the Politician. Indeed, that means, if the Obama budget were to pass, the Treasury would receive the authority to go on an unprecedented borrowing binge, one costing $9.3 trillion over the next ten years, according to the Congressional Budget Office. (The White House disputes that estimation, of course, saying they calculate the 2010 budget to only cost $7 trillion over the same period...Well, what's the difference, I ask?)

Again, while I took some wacks from friends and colleagues for my support of the administration's efforts to attack the crises, I cannot easily lend this new President any support, at all, in this latest endeavor. This budget, quite simply, goes too far too fast for a nation nowhere near recovery--but perhaps (though I gasp at the thought of it) going too far too fast is exactly their strategy.

In a series of private debates that I have had regarding the recovery spending, a good friend of mine recently made an interesting, if not entirely conspiratorial, observation: the Democrats were using the guise of our recession to push through passage of a sweeping political agenda that was not necessarily intended to impact the recession. "Let's pass all we want now, in these times," a Democratic politico might say, quietly, of course, "because the despair of the recession offers the best timing, and because there is little to stop us politically." To be sure, that seemed unthinkable to me, for a while, but as I listened to the Presidential press conference, I realized that my friend may have had a point. The folly of drunkened power often found in Washington might have turned a well-intended mandate for change into something as reckless and agenda-driven as those who came before it.

At this point, I'd like to extend a few words to my President--yes, my President: go slow, dude.

This recession will take time to overcome, but as in any other before now, we shall overcome. In order to do so, America's leaders must be prudent in their decision-making and pragmatic in their approach. It will not serve us well to recover, only to find ourselves buried under the weight stiffer policies or, worse, new and burdensome debts. Pushing an agenda of colossal portions, particularly in a time when things are so bad (and they are)--no matter how right some elements of said agenda might be--probably seems like the useful thing to do; however, it is profoundly counterintuitive and threatens to make matters exponentially worse, by taking the focus squarely off of the recovery efforts, and by weakening our economic status even further. Better, instead, that you go slower, and that the singular order of the day, for now, be the proper implementation of those plans proposed to end these crises. And better that, as the economy recovers from these difficult times, you roll out your programs piecemeal--in a fashion that allows the budget to absorb their costs, and allows you to adhere to your stated commitment to a pay-as-you-go approach to government spending. After all, for the sanctity and sanity of this representative democracy, I cannot see how you, Mr. President, would have any other choice.

Such a budget, as costly as it is, quite honestly, is bad for a nation already drowning in a heap of total debt that, according to the Central Intelligence Agency, stood at roughly 65% of GDP prior to the onset of the crises and subsequent bailout efforts. Therefore, even I will openly admit that the 2010 budget must never be allowed to escape serious scrutiny, if not outright rejection, and I will go further to say that no president or his partisans should ever be allow to exploit difficult times like these to enact single-minded agendas. We, as Americans, are better than this. Mr. President, you are better than this.


John said...

And so begins the political career of Gary C. Harrell...LMFAO...

Seriously, though that GH can be your campaign logo. Short for "Give'em Hell!"

Mashoud said...

BRAVO! Excellent words, Gary! I would like to say ... BRAVO!

Excellent words, Gary! I would like to say that I am impressed by your independence, especially in breaking from the Obama camp on the budget. You have now given me cause to reconsider my own position on the earlier stimulus efforts.

Jonathan, I did read your response to my question. As a creature of Wall Street, I don't agree with you or Gary on leverage reductions because leverage is what's built global prosperity. I think too that the worst thing to do is reinstate Glass-Steagall. These tactics would suffocate investment banking and drive it out of the U.S. for good.

Anonymous said...

I am enjoying your writings. Great blog, Gary.

Tyler J. said...

I guess it is convenient to forget that is was George Bush and his buddies who got us to this point, isn't it, Gary?

Anonymous said...

Independence? This strike me as just more Republican partisanship. The President is trying to help deliver quality health care, promote alternative energy, and give millions some relief. Yes, this will all cost money, but we would not be in this shit if it were not for Republicans and their falling asleep at the switch. Don't blame Obama for doing the right thing. At least this guy has the guts to do something to help working people.

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