Fairness vs Reality

In a post on the day of his Inauguration I said, “As for my expectation, what will the Obama presidency bring?  The best I can say at the moment is: uncertain.  I, like many others, am not at all sure what President Obama will actually do.” In a post a few days later, I said “So the sun is rising on the Obama presidency.  As the literary detective Hercule Poirot often said ‘all will be made clear’ and clarity is a good thing.”

Clarity is a good thing, and 100 days into his presidency, things are now a lot clearer.  But clarity is not always pleasant.  Obama has filled in the details of “Hope and Change” with massive increases in government, massive increases in debt, increased government control over industry, in many areas bordering on nationalization, apologies to those abroad, offending some of our allies, reductions in our abilities to detect and defend against threats, and the use of government to attack political opponents, including the criminalization of policy differences, and most recently witch hunts.  This is certainly change, but I don’t see a lot of hope here. 

Now supporters of the President will undoubtedly take offense at this description (and that they take offense, as opposed to simply disagreeing, says a lot about them).  Concerning spending and the deficit, during the Bush administration, the Democrats vociferously complained about Bush’s spending and his deficits.  I agreed with a lot of their criticism, even if I did doubt their sincerity. 

Though it is not a surprise, it is now at least clear that I was correct to doubt their sincerity.  According to both CBO and White House data Obama will not only increase the budget deficit compared to Bush, he will increase it several times over the deficits the Democrats complained so strongly about .  Problem: Bush increased the deficit; Obama’s Solution: vastly increase it even more.  And he does this while claiming he will cut the deficit in half. 

Obama’s claimed cuts are like a man with a $100 deficit promising that if he increases it an additional $200, in the future he will cut his deficit in half, leaving him only $150 in debt.  Most would see this as increasing the problem.  Yet Obama claims this as progress.  Either he does not understand what he is actually doing, or he is being dishonest about it. 

Now Obama and his supporters are quick to claim that this, like everything else, is Bush’s fault.  It is true that Bush does share some responsibility, particularly for TARP in the closing days of his administration.  Obama, like Bush before him, inherited a recession.  Bush cut taxes, which got us out of the recession, and most of the years of the Bush administration were a period of economic growth, declining unemployment, with the stock market topping out at over 14,000. 

Then in 2006 the Democrats won back the Congress, promising to fix things.  While Bush was still president, he was also a lame duck with very little actual impact on the domestic front particularly with the Democrats in control of Congress. 

What really caused the current problems was that the housing bubble burst.  While the details are complex, the roots go back to housing policies enacted under Carter and Clinton and pushed by Fannie Mae and Freddie Mac.  While you would never know it from the media, it is just a fact that Bush and the Republicans repeatedly tried to fix these growing problems, but they were blocked by Democrats, who instead attacked those trying to point out the problems.  The last major effort to avoid this crisis was in 2005.  Once the Democrats won control of the Congress in 2006, any hope of averting it was gone.  So while the claims that this was all Bush’s fault may play well to Obama’s media supporters, they don’t quite line up with the facts of what actually happened. 

Now somewhat in their defense, most of the policies put forward by Obama and the Democrats have not had enough time to kick in yet.  The Democrats must be included here as Obama’s management style is now also much clearer as well.  He wants to make all the big decisions, and leave it to others to work out the details.  This allows him to take credit for solving problems, without having to be responsible for any problem of implementation. 

As for their policies, it takes time for the effect to show up in the economy.  In fact it can take 12 to 18 month.  So the fact that we do not yet see any effects of their changes in the economic data is to be expected, though the reactions of the market, which is always looking to the future, is not encouraging. 

The disturbing thing is that, at least in an economic sense, there really is no mystery about what their policies will do.  Massive increases in government spending will have some positive effect, but the net effect will be negative. In addition, when money is pushed into the economy in this fashion inflation follows, and the negative effects of inflation will far outstrip any positive effects of increased government spending.  There is nothing magical about this.  It is basic economics 101.  Increase the money supply faster than the supply of goods, and you get inflation.  Suppress the economy at the same time and you get Stagflation.  In the last few months we have nearly tripled the money supply, and the economy is still struggling. 

But this is one of the problems with Liberals.  They seem to think their notions of fairness and equality trump economic reality.  They are sort of like a person who believes that it is unfair that only birds can fly.  For a short time such a person can ignore reality and indulge their notions of fairness, but before long the reality of the ground approaches.  Obama and the Democrats are now indulging their notions of equality and fairness.  Economic reality is not here yet, but it is rapidly approaching.