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?Powered by Sidelines