Posted on 07/08/2009 11:05:29 AM PDT by Kaslin
WASHINGTON -- Around midnight on April 15, 1912, there were a few minutes when Capt. Edward Smith of the Titanic realized his ship was going down -- six watertight compartments breached, less than two hours to float -- yet his passengers slept in happy ignorance. A historical fate hardened while most of the participants dreamed on.
The jobs report last week opened a long gash beneath the waterline of President Barack Obama's legislative agenda. Few yet realize it, but a scramble for lifeboats is about to begin.
On closer inspection, the economic news, which seemed bad, is even worse. Not only did unemployment rise to 9.5 percent but wages fell, undermining the consumption needed for the recovery of a consumption-driven economy. Unemployment increased among "breadwinners" -- married men and women who head households -- also making major family purchases more difficult. Recent increases in unemployment benefits and food stamps have helped many Americans pay for food and rent. Jobs, however, are what lead to the purchase of furniture, cars and homes. Paired with a decline in business investment, these trends make a second-half recovery less likely.
The stimulus package hasn't been very stimulating -- which is what many economists predicted. Pouring money into the economy through a thirsty sponge of federal programs -- the preferred method of Congress -- is slow and inefficient. In retrospect, all of the stimulus funds should have been given to individuals directly from the tap.
There are political implications of a weak recovery -- none of them good for the president.
Obama's spending ambitions would have been jaw-dropping even in the best of economic times. Federal spending this year is about 28 percent of GDP -- a figure exceeded only when Franklin Roosevelt was fighting a global war against Germany and Japan. Along the fiscal path Obama has chosen (according to the Congressional Budget Office), our national debt will double in six years and triple in 10.
Initially, Obama counted on an atmosphere of economic crisis to grease the passage of any legislation he pronounced an economic need. But it hasn't worked out that way. Whatever their virtues, restricting carbon emissions and expanding the health entitlement do not constitute a direct response to America's financial and economic failures. No economic theory suggests that a round of new federal regulations and entitlements would result in a burst of economic growth.
More typical is the recent reaction of Colin Powell, a close Obama ally. "We can't pay for it all," said Powell. "I'm concerned at the number of programs that are being presented, the bills associated with these programs, and the additional government that will be needed to execute them."
Powell is expressing what many moderates in the Senate must be thinking: Is a time of unsustainable debt and economic contraction really the right moment to add massive spending and debt, along with the taxes they eventually require? In what economic universe is this rational? Not even, apparently, in the pleasant, alternate universe of California, which last week began issuing $3 billion in "registered warrants," also known as IOUs. "We don't have the money to pay our bills," admitted Gov. Arnold Schwarzenegger. "It's a sad story."
By the time the health care debate begins in earnest, these challenges at the federal level will be unavoidable. Perhaps $1 trillion in spending will be on the table. Some of the resources necessary for a "revenue neutral" bill may come from savings in the health system. But administration and congressional officials are already hinting at the need for new revenues, including some type of tax on employer-provided health benefits. "The important thing at this point is ... to keep the discussions going," says David Axelrod, even if discussions include such taxes. "We haven't drawn a lot of bright lines," explains Robert Gibbs.
To pass his health proposal this year, Obama would first need to violate his word. As a presidential candidate, he pledged that "no one making less than $250,000 a year will see any type of tax increase" -- the most memorable number of the 2008 campaign. Taxing health benefits would certainly cross this very bright line and add to the public stock of cynicism.
Second, Obama would need to abandon economic common sense -- adding debt to debt or new taxes to a struggling economy. Either way, it would be a sad story.
Or maybe the captain could wake the passengers, end their dreams and announce the obvious: Because the economy has not improved, ambitious health reform must wait.
GOOD!!!
Keep those cards and letters; calls and emails condemning this stupid idea going to your reps!
The rats are already leaving the ship!!
Doesn’t seem to be foundering to me. Just today Biden announced the $150 agreement with the hospitals to “reduce costs” (translation: ration care and kill old people). This seems to have given some new momentum to Senate Dems.
Obama’s socialist policies continue to lead our Republic into a state of disaster. How could anyone have expected any other result?
i said it before and I’ll say it again...Zero SUCKS!
Lady Thatcher’s warning about Socialism that eventually you run out of other people’s money has come home to roost early for the One. Too bad he did not give more assistance to the other people to make more money by encouraging business. A five year old could understand this if explained clearly.
Darn good article. Well written. Thanks for posting it.
These lines alone are worth the price of admission:
“The stimulus package hasn’t been very stimulating — which is what many economists predicted. Pouring money into the economy through a thirsty sponge of federal programs — the preferred method of Congress — is slow and inefficient. In retrospect, all of the stimulus funds should have been given to individuals directly from the tap.”
Founder or Flounder, as long as it goes to Davy Jones locker!
Don't you actually mean $150 BILLION?
Would somebody please explain something to me. My understanding of the $150 billion reduction is only to happen if the cost to the hospitals also goes down by the $150 billion. So if the costs to the hospitals do not go down then it seems they are off the hook to reduce their acceptance of the federal money.
Am I wrong in this? Looks like a bunch of smoke and mirrors to make the common masses think something good is happening.
Americans are warned to not bet that Obama will do the common-sense thing. I believe he and the democrats, aided by a criminally complict so-called MSM, will ram this thing through, using the budget reconciliation process if necessary. I pray the GOP Senators stand fast, with 100% solidarity, against Obama, hanging this debacle-to-come around his neck like a 40 pound millstone.
“To pass his health proposal this year, Obama would first need to violate his word.”
You mean again? No problem as far as I can see.
I called Feinstein and Boxer today and informed them that I do not want any part of their DeathCare or AuschwitzCare. I wanted the government out of my healthcare. Staffer was silent!
I added that they were not listening to the American people; that everyone I know wants all of them voted out of office!
at this point a sane individual might see the writing on the wall and reverse course, if only in the name of self-preservation(see “Clinton, Bill: 1995). Not Bam though, he is a true-believer. Looks like he will ride this all the way to the bottom.
Lately I’ve been reading a lot about ships “floundering” instead of “foundering.”
Liberals and Dems laughed at “Drill, Drill, Drill”.
I am not laughing at this socialized med monster we have to
label as “Die, Die, Die” for all of us older folk who have to get out of the way to ration care.
deeptrout
::applause::
Thats what they have to be hearing!
We can defeat this!
There is almost panic in Zero’s and Clown Joey’s voices when they claim it HAS to be done before the august recess...They KNOW its not wanted by We the people.
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