Mon, 23 Feb 2009 19:25:16 +0000 – By Jon Kraushar Communications Consultant
I believe the president's recovery plan is an "Obamination." What do I mean by that? Namely the president's plan is misdirected change. No matter how good President Obama's intentions are -- sad to say -- his policies aren't right because his principles are wrong.
They rouse the very principles that caused the American Revolution, beginning with resentment against an imperious government that overtaxes, overspends, over-regulates and overrules any dissent. The $787-billion stimulus bill was rammed through Congress so quickly that lawmakers (and the public) didn't even have the time to read its entire 1,079 pages.
Furthermore, the stimulus and another trillion-and-a-half dollars in other government economic "rescue" efforts (for banks, Wall Street firms, automakers, insurers and all the people who can't pay their mortgages) stretches to the breaking point the moral and economic code most Americans believe in. Those who have acted responsibly, paid their bills, saved their money and followed the law are bailing out those who haven't. If one were to update the battle cry of the colonists who protested "no taxation without representation," today it would be "no stimulation with so much confiscation."
President Obama held a "Fiscal Responsibility Summit" at the White House today and he will continue to make his case tomorrow night when he speaks to a Joint session of Congress. On Thursday, the president will release his 2010 budget.
Becauseprinciples have consequencesthe president needs to better explain why his various bailouts punish the prudent, reward the reckless, and flagrantly violate the principle that people must live with the consequences of their personal decisions.
Delaying The Day Of Reckoning Delays The Days of Repair
Starting with President Bush's "Troubled Asset Relief Program" and continuing with its renaming as President Obama's "American Recovery and Reinvestment Act," there has been a pattern of delaying the day of reckoning for banks, financial institutions, and automakers that need to be cleansed of their toxic holdings, toxic leaders and toxic operating procedures.
Just as alcoholics and drug abusers have to face up to their addictions, go "cold turkey," and radically revise their ways, so do ravaged enterprises need to clean out their systems, by declaring bankruptcy, getting reorganized or even sold. You only prolong the agony and damage by subsidizing sick behavior. Perhaps tomorrow the president will tell us how his recovery plan will address this.
If You're Going To Shoot, Shoot Straight
The latest "silver bullet" cure making the rounds of some economic and political thinkers is to nationalize many of the nation's banks, including giants like Citigroup and Bank of America, even if the nationalization is "temporary," as was done in Sweden in the 1990's -- when overleveraged banks were broken up and sold to the private sector.
Whatever cure the president prescribes, it needs to be grounded in the principle that it is better to face reality, own up to failure, take the bitter medicine and get the patients on the road to independencebased on their human potential rather than stimulate dependenceon government, confiscating ever more money and resources from those who are productive in society.
In the bailouts so far, the thrifty have been tapped to bail out the thriftless. This is not only financial engineering; it is social engineering. It suggests turning America into "old Europe" where the welfare state reigns, there is widespread nationalization--from health care to major industries--taxes are high, growth is almost non-existent and innovation, creativity, enterprise and anyone with brains and guts is emigrating. Does America really want to catch "Eurosclerosis"?
Warped values are harder to fix than broken economies. Actually, values and economies that are bent out of shape both need the same cure: tough love. People or businesses that have made bad decisions need to bear the burden of failure, clean up their balance sheets, clean up their acts and transition to reduced circumstances for a while until they can reorganize, restructure and act responsibly. Seizing money from the responsible to pay the debts of the irresponsible isn't acting like Robin Hood; it is Robbin' Like A Hood. People who have saved, paid their bills and played by the rules shouldn't be exploited. That's un-American.
Take The Road Less Taken
Looking around the world, the economic road less taken is the tough love road. It is the road of "creative destruction," where businesses go bankrupt or are sold to make way for creative, innovative alternatives. Thus, horses and buggies gave way to automobiles and typewriters gave way to computers. (Note that private enterprise--not the government--brought those breakthroughs.)
The dangerous road--which seems to be Obama's road--is "state construction," where it is believed that the government must step in to replace individuals and private enterprise, presuming to be the engine of economic innovation, stimulation and growth. Communism and socialism tried this and both failed.
When Government Becomes A Sugar Daddy Do You Know What That Makes Citizens?
Obama's stimulus is predicated on the government's ability to spend its way out of an economic crisis; in effect becoming a "sugar daddy" to the economy. But if many Americans are reduced to being "sugar babies," supported by government money taken from taxpayers, then being a parasite rather than being productive becomes a way of life. American exceptionalism dies--a casualty of good intentions gone horribly awry.
We Can Still Course Correct
Fortunately, America has corrected its course before and emerged from near catastrophe. Will we have to wait for the 2010 elections to try what worked in the Reagan years: tax cuts, Federal Reserve discipline and a reliance on the private sector?
If we revive Reagan's principles, but also cut out unnecessary spending on pork and throw in better government oversight than we've had in the past, maybe we can turn "Obaminations" into "transformations." That would be "change we can believe in."
Communications consultant Jon Kraushar is at www.jonkraushar.net.