{"id":672,"date":"2011-08-08T09:30:07","date_gmt":"2011-08-08T15:30:07","guid":{"rendered":"https:\/\/hushbeck.com\/blog\/?p=672"},"modified":"2011-08-08T09:30:07","modified_gmt":"2011-08-08T15:30:07","slug":"downgraded","status":"publish","type":"post","link":"https:\/\/hushbeck.com\/blog\/2011\/08\/downgraded\/","title":{"rendered":"Downgraded"},"content":{"rendered":"

The country is heading into uncharted waters.\u00a0 Even some of President Obama\u2019s supporters are beginning to realize what a disaster his presidency is. Of course, the closest parallel is the Presidency of Jimmy Carter, until now the worst president in modern times.\u00a0 But Carter inherited a growing economy that was coming out of a mild recession and had about <\/span>5% growth<\/span><\/a> his first couple of years in office. The country only really slid into recession during his last year. <\/span><\/span><\/p>\n

But, unlike Carter, Obama inherited a recession.\u00a0 Worse he inherited one that he did not understand.\u00a0 For Obama, and most Democrats, the recession was the result of the Bush policies, the Bush tax cuts, the Bush deregulation, or all three.\u00a0 Whatever the cause, it was first and foremost Bush.\u00a0 In short they saw the problems in political terms not economic.\u00a0 Since they were not Bush, the solution was easy, just be Democrats, pass the large government programs that Bush and the Republicans had been blocking, and\u00a0 the economy would come roaring back. Thus 2009 was \u201c<\/span>Recovery Act Summer<\/span><\/a>.\u201d\u00a0 When that did not go too well, 2010 was declared \u201c<\/span>Recovery Summer<\/span><\/a>.\u201d\u00a0 Now here we are in the middle of the summer of 2011, and the talk is more about a new recession rather than recovery and our debt is so high that for the first time in history the US credit rating has been downgraded. <\/span><\/span><\/p>\n

The problem was not Bush or even Bush policies, but rather it was the normal fallout following the collapse of an economic bubble, in this case the housing bubble.\u00a0 However there was a different twist this time. In response to the fallout after the collapse of the Internet bubble in 2000 (which likewise was not caused by Clinton), government implemented new laws and rules.\u00a0 Many have had negative effects, <\/span>such as Sarbanes-Oxley<\/span><\/a> but one was a huge mistake and its effects particularly nasty.\u00a0 The Financial Accounting Standards Board (FASB) Rule 157 \u2013 Mark to Market \u2013 almost derailed the entire economy and was behind the financial panic in Sept 2008. This is why TARP (the Toxic Asset Relief Program) did not work; it did not address the core problem. Markets continued to decline until end March of 2010, to the day that it was announced that Rule 157 would be repealed. (For a more complete discussion of this see Preserving Democracy<\/span><\/a><\/em>, Chapter 10).<\/span><\/span><\/p>\n

With the core problem fixed, that should have marked the beginning of the recovery.\u00a0 But Obama was pretty much oblivious to all this.\u00a0 Instead he pushed ahead with the second half of TARP, got a huge omnibus spending bill, took over GM and Chrysler, got a $800 billion stimulus program,\u00a0 a massive increase in government spending, and Obamacare, and those were just\u00a0 the major items. <\/span><\/span><\/p>\n

Democrats had strenuously complained about deficits under Bush.\u00a0 Following the collapse of the Internet bubble and 9\/11 the deficit grew to <\/span>$426 billion<\/span><\/a>, but by 2007 the last Republican budget before Democrats won back control of the Congress,\u00a0 it had dropped to <\/span>$151 billion<\/span><\/a>.\u00a0 Under the Democrats, it jumped back up to <\/span>$422<\/span><\/a> billion before the current financial problems and is now <\/span>nearly 10 times<\/span><\/a> higher than the last Republican deficit.\u00a0\u00a0 Even after adjusting for inflation, it is not projected to get back down even close to the Bush level highs for many years.\u00a0 Thus all the uncertainty in the credit markets. <\/span><\/span><\/p>\n

But worse than the deficits has been the class warfare of Obama.\u00a0 Obama puts everything terms of \u201cthe rich\u201d and everyone else.\u00a0 He portrays himself as standing up to the rich, attacking big business with their corporate jets, and trips to resorts.\u00a0 He epitomizes the saying, \u201cDemocrats like employees, they just don\u2019t like employers.\u201d\u00a0 He does not seem to realize that getting CEOs to stop flying corporate jets may be an inconvenience\u00a0 for the CEO, but it is devastating to the pilots\u00a0 who fly them, the crew who service them, the people who make them, and all the other \u201caverage working people\u201d who jobs are tied to them in one way or another.\u00a0 Thus while CEOs \u201csuffer\u201d at having to fly first class,\u00a0 many more \u201caverage working people\u201d find themselves out of a job as a result of Obama\u2019s blustering.\u00a0 And this is just one small industry.\u00a0 When Obama goes after an industry, it is the workers in that and related industries that are the ones who really suffer. <\/span><\/span><\/p>\n

The Obama attack on jobs are not limited to his speeches. Just as the deficit has exploded, so has government, and more importantly government regulation and its negative impact on business.\u00a0\u00a0 The 2300 page <\/span>Dodd\/Frank \u00a0bill will result in hundreds of new rules and required<\/span><\/a> \u201c26 pages of flow charts merely to illustrate the timeline for implementing the new rules, the last of which will be phased in after a mere 12 years.\u201d\u00a0 Nancy Pelosi famously said, \u201cYou have to pass the bill, so you can know what is in it.\u201d\u00a0 This is becoming very apparent as the rules for Obamacare are being written and surprises keep being found buried among its pages.\u00a0 Not only are the rules themselves a burden that stifles economic growth, all this flux makes it virtually impossible for businesses to plan.\u00a0 They will not know what they will be required to do or pay until the new rules can be written and understood. <\/span><\/span><\/p>\n

Be it directly as with Corporate jets, the resort industry,\u00a0 or his oil drilling permitorium,\u00a0 or indirectly through massive increases in new government regulation and control, or just actions such as the <\/span>NLRB attempt to block Boeing<\/span><\/a> from opening a new plant in South Carolina, the Obama administration has been at best indifferent to business , and more often downright hostile.\u00a0\u00a0 They seem oblivious to the harm they are doing to businesses across America.\u00a0 Yet they are puzzled as to why the economy is stalled and unemployment is so high. <\/span><\/span><\/p>\n

Worse they have no idea what to do. To them this is primarily a political problem where their real goal is to stop Republicans.\u00a0 Case in point:\u00a0 the recent debt ceiling talks. While there was a big push to compromise on the debt ceiling, the problem was that we did not need a compromise, Washington has had plenty of those for decades.\u00a0 What we needed was a solution to the debt problem.\u00a0 \u00a0Yet Obama and the Democrats never seemed to understand this, and they still don\u2019t. <\/span><\/span><\/p>\n

For all their faults, and they have many, the Republicans at least had two things that Obama and the Democrats did not:\u00a0 A budget, and a plan. Actually Republicans put forth a number of plans.\u00a0 For their part, even though they are required by law to pass a budget each year, it has been <\/span>over 800 days<\/span><\/a> since the Democrats who controlled the Senate have had one.\u00a0 And this is not about an inability to pass a budget, since budgets cannot be filibustered.\u00a0 Democrats in the Senate have not even proposed a budget, and currently have no plans to do so. <\/span><\/span><\/p>\n

With no budget, and no plan to deal with the debt, all Obama had to offer in response to the Republican\u2019s budget and Republican plans were speeches attacking them, calls for tax hikes, and oddly, still more attacks on Corporate Jets, as if taxing corporate jet owner would magically solve our debt problems.\u00a0\u00a0\u00a0 But calls for taxes on the rich are not a plan, <\/span>particularly when compared to the magnitude of the problem<\/span><\/a>. <\/span><\/span><\/p>\n

Republicans understood that they would not get everything they wanted, and so in the end they compromised and passed the Cut, Cap and Balance plan.\u00a0 In response, Obama gave more speeches.\u00a0 After more compromises and with the clock ticking,\u00a0 in the end the President got what he wanted, the debt ceiling raised enough to <\/span>get him past next year\u2019s elections<\/span><\/a> while Republicans settled for some very minor reductions in the rate of increase, which in Washington speak are call \u201cmajor cuts.\u201d\u00a0 While they had a compromise, without an actual solution, the credit agencies downgraded the country\u2019s credit rating. <\/span><\/span><\/p>\n

So we enter uncharted territory.\u00a0 We have a President who has no plans other than to run for reelection next year, and who frankly\u00a0 seems at best clueless as to the impact his polices are having.\u00a0 The effects of Carter\u2019s policies really began to show up near the end of his Presidency. Before things got too bad, he lost his bid for reelection and within a couple of years Reagan had turned things around.\u00a0 But we have already been suffering for over 2 years and we still have about 15 months till the next election.\u00a0 Then there will couple of more months till the next President takes office and can begin to fix things.\u00a0 Unlike other counties, we do not have the mechanism for a vote of no-confidence, so it is going to be a very long 15 months and it is unclear how much more damage Obama will do. <\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The country is heading into uncharted waters.\u00a0 Even some of President Obama\u2019s supporters are beginning to realize what a disaster his presidency is. Of course, the closest parallel is the Presidency of Jimmy Carter, until now the worst president in modern times.\u00a0 But Carter inherited a growing economy that was coming out of a mild […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7,12,13,15,28,36],"tags":[195,1992,208,226,243,314,339,347,360,419,428,1998,501,514,721,826,924,934,936,952,985,1000,2011,1080,1081,1082,1109,1135,1150,1216,1241,1244,1299,1339],"class_list":["post-672","post","type-post","status-publish","format-standard","hentry","category-budget","category-domestic-policy","category-economy","category-election","category-politics","category-taxes","tag-boeing","tag-budget","tag-bush","tag-cap-and-balance","tag-ceo","tag-compromise","tag-corporate-jets","tag-credit-markets","tag-cut","tag-doddfrank","tag-downgraded","tag-economy","tag-fasb","tag-financial-accounting-standards-board","tag-jimmy-carter","tag-mark-to-market","tag-nlrb","tag-obama","tag-obamacare","tag-omnibus-spending-bill","tag-permitorium","tag-policies","tag-preserving-democracy","tag-recession","tag-recovery-act-summer","tag-recovery-summer","tag-rich","tag-rule-157","tag-sarbanes-oxley","tag-stimulus-program","tag-tarp","tag-tax-cuts","tag-the-toxic-asset-relief-program","tag-us-credit-rating"],"yoast_head":"\nDowngraded - Politics and Religion<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hushbeck.com\/blog\/2011\/08\/downgraded\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Downgraded - Politics and Religion\" \/>\n<meta property=\"og:description\" content=\"The country is heading into uncharted waters.\u00a0 Even some of President Obama\u2019s supporters are beginning to realize what a disaster his presidency is. 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