By Douglas V. Gibbs
Barack Obama believes in the policies of Franklin Delano Roosevelt, who liberals proclaim was the savior of America from the Great Depression. Problem is, FDR actually worsened, and lengthened, the depression. The theory of priming the pump with excessive federal spending in order to get consumers to spend does not work. Though consumer spending is a key in getting an economy moving again, it is worthless without a private sector that produces. In order to free up industry so that it may produce, government needs to literally back off, allowing the free market to turn the engine crank. This is accomplished with reduced regulations against the business sector, and a reduction in taxes across the board. I am not talking about temporary fixes, like the tax deferments or tax credits offered by the Obama administration, but permanent, worthwhile tax cuts that encourage growth and confidence.
As a result of Obama’s FDR playbook, we are not in recovery mode. In fact, of late, a cacophony of bad economic news has been ringing through Wall Street. The federal government has been smarting over continually declining home prices, and a major unanticipated slowdown in private-sector job growth. Investors are adding to the worries by quickly shifting into sell mode, weakening the Dow by 280 points in one day.
Obama is using the same failed economic playbook we used 80 years ago in dealing with the Great Depression, which resulted in a false recovery, followed by the most painful contraction in U.S. history, with a 25 percent unemployment rate.
In 1929, we decided to borrow, print and spend money we did not have in order to promote a recovery. The strategy failed then, and it is failing now. The fear is that the leftists are going to continue to spend, because they think the problem is they just haven’t primed the pump enough, and the spending is not going to stop until Republicans put a stop to it, or we as a nation wind up with a credit downgrade, and possibly the loss of the U.S. dollar’s Global Reserve Currency status.
Such an economic event will make the dollar virtually worthless, and the economic difficulties of the sick man in Europe prior to Margaret Thatcher that Britain encountered, due largely to the over-printing of money and the fact that the British economy had become the most socialized in Europe, will be nothing compared to the pain associated with the fall of America’s position as the economic leader in the world.
U.S. spending will eventually lead to austerity measures similar to those being attempted in some European nations, such as Greece, because the fact is that spending at the rate the U.S. currently is doing is absolutely unsustainable. The problem is, the entitlement mentality is so ingrained in some segments of American society, if we get to the point of austerity measures there will be riots in America. There will be fighting in the streets over government cutting back on the freebies it hands out. Without those cuts, the nation is doomed. With those cuts, blood in the streets is inevitable.
The resiliency of the dollar is beginning to crack. Inflation data confirms the cost of living is rising much faster than wages. Because of Obama’s liberal policies that are largely fashioned after FDR’s failed policies, America is on a one way course of crushing the middle class in less than a decade, if not within five years.
The federal government’s blatant inflation policy will hurt us all, and our pain will be primarily due to the fact that this administration is using the catastrophic FDR playbook to try and fix our economy. But Obama has an added twist that makes it even worse – Environmental legislation and the blind chase after market killing green technology.
In other words, as failed as FDR’s policies were, Obama’s are worse.