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The More Times Change…

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Last Friday at the Brookings Institution, Lawrence Summers, an Obama economic advisor, repeated the phrase "in the coming weeks." Both times it referred to struggling Treasury Secretary Timothy Geithner rolling out new plans for an economic resurrection. The usual stalling by Team Obama with their economic recovery plan was spiced with a dash of cheer. With little detail as to how banks and the financial system would be fixed, Summers tried to push the glass half-full picture of the economy. In time, things will get better.

This shift of tone by Summers and others comes as El Presidente's poll numbers have started to slide. The honeymoon is clearly over and Bush-bashing carries little weight now. Decades ago, the slower news cycle might have given Obama six months or a year of breathing space. The instantaneous news cycle that worked to his advantage during the campaign, now demands not just actions, but results – the feel-good offensive attempts to get the spending train rolling so the economy picks up, so Obama can pass stimulus 2.0, health care ( a meager $600 billion down payment), more money for Detroit, more money for banks, etc.

However, time is not an ally for Obama. Unemployment in the U.S. has already hit the level the Obama folks felt it would hit at the end of the year. Clearly, things are getting worse faster than the PR folks can plug the holes in the propaganda dike. The Bush Recession is fast becoming the Obama Depression. More spending must be rammed through fast and taxes must be raised now, before people start digging in their heels. The health care plan is now seen as needing more funds. Obama minion Peter Orzag has floated the idea of taxing private health benefits, something Candidate Obama skewered John McCain for proposing.

It's also necessary to buy some time by attacking the critics. Mouth off any doubts about Obama economics or a plummeting stock market and you might wind up in front of jokester Jon Stewart and his video editing steamroller. Since his chief prop, W, has departed, Stewart has had to make ends meet by staging a Soviet-style show trial complete with a remorseful stooge. And he's rather good at it. As the volume goes up on the criticism of Obama and the flaccid economy, look for this comedic Robespierre to swing into action again – all in the name of the public good, of course.

Speaking of jokes, Lawrence Summers had one in his speech. With a subdued wistfulness he recounted how, in 2000 at the end of the Clinton administration, he had joked with colleagues about how the government would issue debt, since the government was running a surplus. The laughter quickly evaporated as each audience member grasped the real punchline. We will be living with deficits and massive debt for our lives and generations to come. The Obama spending behemoth guarantees that fact. Additionally, the liberal playbook states taxes must be raised and raised again. The result will be slower growth, a longer recovery and a lower standard of living for all.

Liberals made the same mistakes in the Great Depression. Funny thing is they were copying Republicans initially, and then wanted to outdo them. Required reading for today must include Amity Shlaes' now eerily prescient history of the Great Depression, The Forgotten Man. Here you find a fascinating parallel between that depression and this one. Under Hoover as the Depression set in, Republicans raised taxes and funded massive new public works projects, like Hoover Dam, to stimulate the economy. This time around, Bush pumped out billions in checks last spring and then followed with TARP and the Detroit bailout in the fall. Substituting this time for a tax increase was a rocketing up of the price of oil during the summer of 2008. The wealth sapping effect effect was very similar.

FDR arrived and not only continued Hoover's massive spending, but cranked it up and raised taxes some more. Obama has outdone imitation here. He's seriously ratcheting up spending, to a level well in excess of FDR, and he's raising taxes. We can't really say the parallel works with the Smoot-Hawley tariff act because Bush was mostly for free trade. However, Obama seems more inclined to go the protectionist route and made noises to that effect during the campaign.

The chilling big difference between then and now: the government then wasn't running a huge deficit and fighting two wars. Another difference is the role of the states. States in the '30s didn't provide nearly as many programs as they fund now, so they didn't tax mightily, the way the do now. Big states like California and New York are planning massive tax increases, along with smaller fry like Utah, New Hampshire and, of course, Massachusetts. As an example, the Bay State is planning to raise the gas tax 19 cents, raise the sales tax by 20%, raise the meals tax and, my favorite, put a tax on candy. How these guys missed taxing a constituency (children) that can't vote all these years is beyond me. Obama can brag all he wants about not raising taxes on 95% of Americans, but the states will do the job for him and then some. And when the stimulus runs out in two years, the states will have to raise taxes again to fund their programs once again.

One last parallel between the Great Depression and today:- the Roosevelt Administration was very active in pursuing a list of enemies. Whether they were people from the Hoover administration or those who could frustrate their current plans, people like Andrew Mellon and Sam Insull were attacked via the media and the courts. The Obama crew hasn't gone to court just yet, but the media takedowns are beginning.

As the pie shrinks, the divisions in America are about to get nasty. No amount of cheerleading or PR hit jobs can stop that. Let's just hope somebody else besides comedic inquisitor Jon Stewart and Obama, with the inevitable multimillion dollar book deal waiting, prosper in the next three years. Or else leaping forward to 2012, the obvious question will be:- are you better off than you were four years ago?

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About Mr Dock Ellis

  • I cannot believe this! Not a single person has commented here! It’s just like that Crow Jim article Dan Miller wrote. Nobody wants to face the uncomfortable facts. Where is Lisa Warren of Huffington Post fame? She is needed to defend the Robes of the Messiah! These holy garments are being dragged through the mud by all sorts of nasty people, like the author of this article!

    Where is Barbara Barnett? She’s off watching TV (“House”) and assiduously (the word is related to Hassid) ignoring the house of cards falling around the American economy. It reminds me of what my oldest boy did 16 years ago at age four when my wife vomited a week’s worth of food with a stomach flu – he buried his head in the couch cushions!

    Where is the statistic laden Dave Nalle (pronounced nahwl, folks) to brighten our day with how good things really are? Are all the gods of optimism off on vacation? Are they all gathered in some Starbucks (should be called Starbust) somewhere laughing at all of us poor readers of Blogcritics? Are they all maybe in the bathroom defecating, like the absent god that the priests of Baal called to on Mount Carmel millennia ago?

    Dock Ellis has got a whole stack of nasty points that nobody – but nobody – seems to want to address. It’s going to take more than a down in the mouth house assessor ( I think that’s what the proper title is) and a lady who thinks she is the reincarnation of JFK to defend the great Messiah of the West. Where are you all? your help is needed – badly!!

    What happened to that lady celebrating when Obama won? The one who thought she would never have to pay a credit card bill or mortgage bill again? What happened to the birds and the flowers – the hope and the change you could believe in? Are they already in the Dispoz-All?

    Boy, that was fast! B. Hussein Obama seems worse off than liquor – at least liquor has many defenders, if no defense. Obama seems to have no defenders AND no defense.

    Obama has been doing things since he was inaugurated other than figuring out how to spend America into debtors’ prison. Wikipedia has removed all references to questions about his citizenship. Obama’s presidency has been good for the black man – unfortunately the black man appears to be Obama.

    There is a cause to all of this and it is a lot simpler than the reams of paper people would make it out to be. I’m working on describing it – but I want to get PAID for a change for sharing it….

  • Ruvy, what possible reaction could any commenter give to this article? It is basically just yet another whiny diatribe lacking in anything constructive for people to react to.

    Nobody except another member of the grumpy old people school of politics that is…

    I’m quite sure that whatever it is you are working on with regard to your pet theory as to the cause of all this will be more of the same old pessimistic, unrelated to fact, mystical writing that you are already so well known for. Why would anyone want to pay you to read more of that?

  • That’s okay, Chris. I keep my opinions to myself for a reason. I haven’t finished the book I’m working on. When I do, I’ll be like any other author with a book to sell.

    There are no solutions to the problems that Obama and America face, problems that I suspect will overcome Europe after they have overcome and broken America. And make no mistake about it. The same basic issues that face America are facing Europe. For the time being, they are taking different form. For the time being the German European Central Bank can handle Europe’s finances. We’ll see what the summer brings….

    But at some point the elemental problem facing America, Europe and the rest of the world will unmask itself clearly for you to see – and then you will realize that you have no solutions in its face.

  • Ruvy, I just hope your book is more coherent than the kind of unsupported and unsubstantiated opinions you have made so far.

    I bet you $100 that both the USA and Europe will still be in the summertime, $500 that they will both still be there at year’s end and $1,000 that they will make it to the end of this decade.

  • Chris, thank you for your kind wishes!

    As for your bet, there will still be a USA and Europe (and a UK) in the summertime, they’ll be there at year’s end, and they’ll still be there by the end of 2010 (or if you prefer 5770). There is nothing to bet on.

    What condition they will be in, on the other hand….

  • So your “prediction” that problems will “overcome and break” the USA and Europe are either wrong or working on a longer timescale. Which is it?

  • STM

    Lol. Nice to see you two blokes still going at each other hammer and tongs. It’s almost comforting.

    Like the headline says, “the more things change … “

  • Stan,

    Chris just has some questions that I’m not answering, that’s all….


    Go check out that article about markets not being rational. You’ll get more help there….

  • Mr. Dock Ellis

    Perhaps I can shed some light. I laid this comparison as a simple exposition of maybe how a book of the past might apply to the present. It might actually give you some idea of where things are going, not as a hit job on Obama or saying the US is finished.

    Interestingly, after I wrote this, Mexico slapped a bunch of tariffs on US goods, initiating perhaps a new round of protectionist trade wars. I mentioned Smoot-Hawley and said Obama might be headed in this direction.

    I’m not Nostradamus, but as they say the past is prologue. I won’t quote Santayana here, but Malcom X. ” A people without a past is like a tree without roots. It dies.” I do this so individuals might pursue self-enlightenment through history and the collective whole might then benefit.