The “good” news is from Steve Forbes and Ben Stein, both of which are indicating yesterday and today that the corner may be turned soon due to proposed changes in the “mark to market” law and shifts among the bank regulators that are working to free up credit. They use a lot of caveats, but seem to think the economy has begun to turn. I suspect we’ll hear more about these coming changes next week when the President and his economic advisors are suppose to present the “TARP 2” plan (i.e. how to fixing the liquidity problems that the original TARP was suppose to fix.)
The extreme “throw the baby overboard with the bathwater” urgency we’ve seen this week from the Democrats may well be due to a recognition that the window may be closing on passing the best patronage bill of the decade. President Obama has given up a lot of “presidential” aura by seeming to act more like a cheerleader for his party’s congressional team than a leader of “all of us”. He should never have allowed the party hacks turn the stimulus bill into a spending bill, and the “what is stimulus but spending” remark he made Thursday night to the Democrats in the Williamsburg retreat will definitely come back to haunt him.
No, Mr. President, “stimulus” is not the same as “spending”. It is suppose to get money moving in the economy, yes, but it is suppose to be QUICK. Calling for “quick passage” of a multi-year spending bill is NOT the same as INSERTING MONEY into the economy QUICKLY. Virtually all of the current bill either provides aid to the unemployed or addresses spending that will not be significant until a year from now. There is very little to STOP layoffs, only back fill after careers and businesses have been destroyed.
And the bulk of the Republican proposals are not much better. They are STILL influenced mostly by the big business and banking types that believe, like the Democrats, that what is good for them is good for the nation. The Republicans, as a result, continue to emphasize tax breaks for corporations and high-end investors when the REAL MONEY, as far as stimulus to the masses is concerned, is in FICA taxes. Any tax break done through IRS rule changes will take months to take effect.
A FICA tax holiday would take effect on the next payroll run, only days or weeks after passage, and will immediately impact the plans of individual spenders and employers. Customers will return to the stores (having 7.5% higher take home pay) and businesses will be saved from bankruptcy (by having 7.5% lower employee costs.)
This is an excellent example of what is wrong with BOTH parties: they think governance is a GAME in which the “we” in “WE WON” applies only to those on THEIR team. And “bi-party negotiations” are limited to “I’ll help you pay off your donors if you help me pay off my donors.” In other words, I’ll overlook your corruption if you overlook mine!
We should study the economic history, evaluate the alternatives strategies, and do what most quickly will turn the economy around for the vast majority of us, ON ALL SIDES. They should not be making winners of a few at the expense of the many. That is PRECISELY how the “filthy rich” get filthy! Open markets with free competition will distribute the wealth far, far more fairly than the government manipulated markets we see today. Remember: fully 1/3 of the GDP is government spending, squeezing out the influence of open competition in many corners of the economy.
So, now that we’ve gotten the spending orgy over and the “winners” have brought home the bacon to their contributors, can we please get back to fixing the lending problems and get people BACK to work???