– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. —
In his first one hundred days, President Obama has shown himself to be one of the most radical U.S. presidents in history. He is harming America’s defenses by publishing memos on interrogation of detainees and threatening to prosecute lawyers who drafted supportive memos. He shakes hands with America’s enemies, such as Venezuelan leader Hugo Chavez, and sends mixed signals to its friends, such as Colombia’s President Uribe.
And, in the name of combating a recession, he is destroying the fundamental institutions of America’s free-market economy.
Not only would President Obama’s proposed programs move government spending to levels, in relation to the economy, unseen since the end of World War II, but his administration is increasingly involved in the minutiae of a new, unwise, industrial policy, such as how much firms can pay workers, and which banks are allowed to repay government loans, and which industries and companies deserve a government rescue package.
Under Obama’s proposed budget, the nonpartisan Congressional Budget Office projects the government deficit to hit $1.2 trillion in 2019, or six percent of GDP, after “bottoming out”—if it does—at $658 billion in 2012, a level more than 40 percent above the highest deficit under the presidency of George W. Bush. By 2019, government spending would take up nearly a quarter of GDP, far higher than at the peak of Iraq war spending and the highest, excepting 2009 and 2010, since 1946.
Much has been written about President Obama’s plans for multi-year, growing expenditures on energy and health care. He has proposed to invest billions of dollars in wind, solar power, and other renewables, which now produce about 3 percent of U.S. energy, yet he neglects nuclear power, which produces 20 percent. He has suggested a substantial cap-and-trade energy tax, which would raise more than a trillion dollars over time, according to some estimates. And he wants a down payment of $634 billion for a universal health care plan whose details he has not yet confided to the public.
In addition, Obama is pushing for other programs which are both costly and naive. One of his priorities is high-speed passenger rail service, which was given a downpayment of $8 billion in economic stimulus funds and possibly $5 billion more in the budget. This proposal is, to put it charitably, poorly-designed. Real high-speed rail, with trains that travel 150 miles an hour and faster, can be found in Europe and Japan, but they have not stemmed the increasing use of road transportation. And these trains need their own, specially engineered rights-of-way, which would cost much more than $13 billion.
Some of Obama’s economic proposals appear to be aimed at placating labor unions, an important element in his political base, rather than encouraging economic recovery. In March, even before the swine flu scare, he signed legislation ending a program, opposed by the Teamsters union, allowing a small number of Mexican trucks to enter into the United States. Mexico is retaliating by imposing tariffs on almost 100 agricultural products, including wheat, beans, beef and rice, hurting American exporters.
In another concession to unions, the president has let the U.S. Labor Department end some disclosure requirements for union finances, originally put in place so that union members can learn how their dues are being spent.
Although Obama lauds transparency, the Labor Department has announced that it would not enforce the filing of the form that requires union officials to report conflicts of interest, such as whether they had personal relationships with firms doing union business. In addition, unions will no longer be required to disclose supplemental information about officers’ pensions and compensation.
Even as unions are allowed to reveal less about their finances, financial institutions that have taken government funds, some reluctantly and under Treasury Department duress, are subject to an unprecedented level of scrutiny as to their compensation of senior executives. Goldman Sachs, Morgan Stanley, and J.P. Morgan are being discouraged from repaying their Troubled Assets Relief Program funds, even though pay caps are interfering with retention of talented staff. A government pressuring banks to do something not required by law is engaged in extra-legal behavior.
The government’s treatment of executive compensation bonuses, standard in many industries, has also been capricious. Some executives working in banks that received TARP funds were paid their bonuses without complaints from Washington. Others, notably those working at AIG, were demonized both by the press and government.
For those who favor nationalization of the economy, or at least of big business, Obama’s first 100 days have been a roaring success. Others, however, pray that the economy can survive not only the recession but also the president’s prescriptions.
Trackback
55 comments so far
Previous | 3 | 2 | 1 | Next
if anybody thinks that we are going to come ou of this debt you all better wake up and smell the coffee we didnt even pay chinas last months intrest 0f hundreds of billions china will soon own america if the call in thir loans and treasury notes we are completley broke and the next shoe to drop is the federal reserve bank no money either.
Mike O, you are grossly mis-informed. Every thing that you read will tell you the boom under Clinton was due to increase of the dot.com and the internet boom. As someone else has stated, the years of the Clinton terms were controlled by the Republicans in congress. The President does not control the budget, or the laws passed or their outcome. The congress does. I am not going to argue with someone who does not belive in reality. BTW, maybe your Hillary will attempt to straighten out the mess your president has gotten us into. She will be the Deomcratic nominee in the next election. Hide and watch.
Obama is a terrible president. It hurts to even offer him the title President Obama but nevertheless, he did get voted in. He is so in opposition to what he is sworn to protect.
Diana, i see you got the rove talking points memo. Your points are all totally refutable. Lets just start with the first real point … since you waste the fisrst paragraph coughing up Rovian finger pointing.
Did Obama destroy the free market? You think he did? Really .. or are you just going for shock value? Let me take you to the distant past … 7 months ago. Do you recall that deregulated free market came within an inch of destroying itself and everything remotely attached to it? Do you recall that the brilliant free-market minds came up with financial packages that they themselves could not unravel. The same banks that thought it was okay to be leveraged 30:1 or more. Your a bit confused even for a pundit … i’m shocked your editor didn’t immediately point this out. But you have the audacity to be mad that, unlike the Paulson plan (who bailed out the firm he owns 500million in stock in), Obama put some strings on the money. And really … they only got strings after they showed how morally depraved they are by handing out bonuses. God, you have a really bad memory.
you know, I initially thought it was a bad idea to micro manage the banks, but it turns out its brilliant. See, greed is the one constant that they understand. And if you cap their earning potential while they hold a loan … guess what … they go out of their way to pay it back and fast. It seems to me that ’salary-approach’ actually provided the stick that was missing in the Paulson plan?
Diana, you don’t like Obama because he crashed your party, he spoiled your good time, your faith in Reaganomics is ruined and its his fault … somehow. I liken the republican reaction like hearing moms car park and the house is a total mess. Or maybe, your the babysitter in master bedroom with your boyfriend and the parents just got home early. We’ll tough stuff. You’re busted. But way to turn it around. Instead of ‘lesson learned’ … its you yelling at them for coming home early. Then yelling at them for not paying you.
But your just a pundit that got lucky to have someone at Reuters want to publish your opinion. Your really not the bad guy. What i am really pissed at is Wallstreet. Every year they come to my company and tout the virtues of saving and adding to my 401k. They said its for the longterm. Then they go out and try to make short term gains on it. Its like going to Vegas … but gambling with someone else’s money and telling them you’ll split the pay out if you win.
But i’m also pissed at myself. Somewhere along the line i got convinced that it was only natural to make 20% return on my money. That it was better to invest to get money you didn’t work for then create wealth with my own work. At one point in time, Western Civilization considered it usury to lend money with interest. You where considered a leech on society if you just got rich by collecting interest, skimming off other peoples hard work. Now, our financial system has allowed the leaches to become the biggest fish in the pond. I’m going back to admiring the people who build companies … not the people who finance them.
I have heard talk radio describe some liberals as thugs, bullies, houligans and haven’t understand why someone would make such comments…until now. Reading the comment posted by Chris now helps me better understand what they were talking about.
It’s funny how some people choose to ignore the ‘facts’ as presented by one side when rebutting comments. Anyone who’s been to Europe, and it seems Obama is bent on making us more like the Continent, has seen the vast railway system in every city. It is hard to fathom the United States being able to implement a bullet train system. The comment in the article argued (implied)the system would cost billions more than proposed. The rebuttal comes back with “a few train tracks”…? Huh? Really? Ignore the reality and maybe it will go away?
Who is going to argue for the rapid escalation of socialism that Obama is imposing on this country? What country in the history of the world was succesful running this way? If you do decide to conjure up some story of how this is good. It still contradicts the basis on which this country was founded. Limited government. And yes, a God loving, God fearing Christian based people.
No, no one is going to force you to become Christian. You are free to choose your religious beliefs. But it does not take away from the fact that our founding fathers, who created the greatest living governing document, were Christian and wrote Christian values into this country’s origin. So now we have to hide these facts and can’t talk about it? Really? Because we’re going to offend someone? Really? This is the basis of the country’s roots. We became the greatest country on earth…and somehow in the past 50 years it has become wrong? Really?
It’s unfortunate to see all the Bush bashing. It’s very popular and it seems many people know they can get support by making a comment in conversation…even if they have no idea about what they are talking. Not a clue. Maybe it’s not their fault. They don’t read or listen to what is going on. And of course the media can be misleading.
People want to ignore what happened under the Republican congress…as in policy that spurred growth. Trickle down effect is too much to argue here. Are there exhorbant salaries that exist? Sure. Are there people who take advantage of others in the name of greed? Sure. But the bottom line is jobs are created with people who have the guts to invest, build something, invent something…and eventually get rich from it. Does that make them bad people? It’s an arguement that seems not to get addressed by liberals. Instead, it seems that the focus is on the greedy guy who swindles money from people. Not on a guy who founded a software company, became one of the richest people on earth, and employs tens of thousands of people. You prefer to have the government manage businesses???
On the one hand it’s hard to understand the thought process of the Left. On the other hand, watching the liberal media with slanted reporting, the average guy doesn’t stand a chance to understand what is really going on.
3 months into a gigantic mess created by 8 years of blind ideology and outright mistakes, it looks like the problem definitions and required fixes are being enacted and transparently too.
Second-guessers should turn down the rhetoric for a year or so to have a serious look at the staggering “to do” list which the President inherited without the luxury of being able to pick a couple of items.Then, with some time and progress to review, they might not just grind but suggest their own reasoned and assessed alternatives if they have differences. I for one am amazed at the focused effort and early signs of progress which have been achieved. Along with this are examples of the President’s leadership style and resolve on many fronts including foreign policy where the US is regaining its reputation without caving in to adversaries.Wish the administration well rather than pulling it down.
Fact: EVERY Republican voted against the Clinton budget that started the boom. Clinton specifically taxed what needed taxed and relieved what needed relieved. You read up, Billy.
Fact: There were surpluses as far as the eye could see when Clinton left. The major debate between Gore and Bush was what to do with the surpluses. Bush elected trickle-down economics, or voodoo as his father called them. Even reagan abondoned it with massive tax increases himself.
Economists have been nothing but hacks to the USG and corporate swindle of “Free Trade”. “Free Tade” at any and all costs and to everyone but the corporations. The scam of “Free Trade” has hollowed out our economic base making this recession worse, squandered our economic sovereignty and made us slaves to Red China. Believe me these vultures will come home to roost - just wait until Red China wants to make a move in the western Pacific.
After seeing that our economy was sitting on a foundation of sand, how can anyone trust what an economist tells you? I blame economists for this recession. It’s their job to understand the economy, to warn us laypeople of its problems, and they obviously failed. Economics may as well be called politics, because that’s all I hear coming from this lady’s mouth. Politics with a few statistics thrown in for good measure.
If Ronnie comes back from the dead maybe you could go back to work for him? In the meantime try walking your newsreporter ass down the middle and less to the Republican side of the road please.
Mr. Obama’s budget rests on the blade of a very sharp knife. By the white house budget office’s own admittance, the Obama budget will make the economic situation worse should our economy not experience the double digit growth that the Obama administration expects in upcoming years. Mr. Obama also expects budget windfalls from lower health care costs in the future to fund his current health schemes. I, for one, do not like the specter of what ifs and contingencies floating around spending plans, because, well, things never seem to go as planned. Look at California; they are currently in the worst shape of any state in the Union because they chose to spend money they had not earned yet. My father used to have a great axiom for this very situation: “Son, you can never bet on the come.” Mr. Obama would do well to heed the sage advice of my old man.
Mike O.
This classic “post hoc, ergo propter hoc” argument has been made far too many times by the Clinton aggrandizers. Always, the fact that the 1990’s was an era of unprecedented technological growth that radically altered our business environment and paved the way for globalization is simply left out of this fallacious argument. Unless you would like to credit Mr. Clinton with the invention of the Internet, please do not assume that the economy boomed only due to his policies. In addition, there was a yearly surplus at the end of Mr. Clinton’s term, not an overall surplus - we were still in quite a bit of debt. Oh, and on top of that, there was a Republican majority in Congress during this time period that reigned in spending through the utilization of a Republican spending policy named “paygo.” You simply cannot justify this argument because you have left out too many other contributing events.
New flash for you, Mike O, the economy under Clinton had nothing to do with anything that he did. The upturn was due to the boom of the .com industries. Read up.
April 29, 2009
Where were you when the Bush administration promised to pay for the Iraqi invasion with Iraqi oil money? Why did we not hear arguments from you when Al Gore’s lock box was raided and the national surplus was “magically” reduced into a raging “deficit”? At least we get a bullet train under Obama. Under Bush all we got was torture and the greatest economic free fall since 1929. Not to mention the enmity of the Iraqi people, who want us out of their country even after all the lives, suffering and billions in war expenditure and economic aid for their country. Yes, Jr. Bush, the archetypical “Ugly American”.
I think the guy’s been a complete washout - ZERO!
He has had no successes. He’s only embarrassed his country by apologizing to anyone who’d listen and by shaking hands with every degenerate potentate and dictator he’s been presented to. The reality of BO, that hag Nancy Pelosi and her clueless lap dog Harry Reid running the country sends shivers of abject terror down my spine.
The political polarization of America, manifested in diverse, uncompromising political and economic philosophy, is the only obstacle to recovery.
Obviously above I meant George W. was in office when TARP was written, not H.W.
After eight years of a president who stole from the poor and spent trillions of dollars on a war that made no sense and pretty much no one supports anymore, I’d say Obama isn’t doing too bad. At least the money he’s spending can in some way be given back to its taxpayers.
Less we forget the majority of the TARP bailout was written when George H. W. was in office, and was written by Representatives in dark corners of the capitol. Not sure how that can be pinned to President Obama.
And shouldn’t we expect an assault on train travel from a person who worked for the American Petroleum Institute? Which uses more oil, hundreds of cars, or one train?
At some point, hopefully before the wells run dry, Americans will have to think about which makes more sense to maintain: a few train tracks and trains driven by professional drivers, or a crumbling system of thousands of Interstate Highways which promise to keep future generations behind the wheel 20% of their lives or more, and us fighting wars in the Middle East for causes no one’s sure about.
So if the economy ever recovers, Obama gets the credit? How would you distinguish the impact of his policies vs. the fluctuations of a normal business cycle?
I love how Obama’s stimulus proposals are couched as ‘creating or saving’ millions of jobs. By including the word saving, he can always claim that his policies worked irrespective of the absolute unemployment level.
We heard these same lame arguments when Bill Clinton was in office. Tax increases will kill the economy, the family leave act will kill business, increasing the minimum wage will kill small business. Every Republican voted against the first Clinton budget.
We saw the end results. Over 20 million jobs created and a surplus.
Obama’s plans are what is necessary to repair the massive damage done by the Bush administration on all fronts from schools to infrastructure, health care to our low standing in the world, the rise of terrorism due to his torture policies and the failures in Afghanistan.
Diana Furchtgott-Roth will be eating her words by the end of the Obama term, but you will never see a column admitting so.