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Feb. 10, 2010 Introduction After a quarter of the way through his first term as President, Barack Obama faces harsh criticism from the far-right, which was to be expected. He came into office as “the Change President,” and as the picketer’s chant goes: “What do we want? (change); When do we want it? (Right NOW).” The President’s critics fail to note the difficulty in changing things quickly after eight years of bad economic policy. They decry his policies as “socialist” and “dangerous.” They argue that he is “not doing enough.” This is the equivalent of hiring a man to clean up the destruction after a tornado, and after two hours into his eight-hour shift, he’s fired because there is still debris lying around. The American economic house is snowed under by a national debt of $10,759,000,000,000 (10.7 trillion ), up nearly 5 trillion when George W. Bush took office in 2001.1 The stock market was at 10,558 when Bush took office. It reached it’s all-time high on October 1, 2007 (14,067), but by the time Obama took office it was 7,949.2 Under Bush, unemployment was 7.2%3. After George W. Bush inherited ten billion dollars worth of projected budget surpluses, he managed to run the country into economic chaos by providing tax breaks to the wealthiest Americans and fighting two wars with no visible means of economic support. Millions of jobs were lost and continue to be lost on Obama’s watch. Congress passed two stimulus bills designed to jumpstart the economy. These packages helped banks that were on the verge of collapse, two of “the Big Three” automakers in this country, relieved some financial institutions of their burden of toxic loans, and were intended to create jobs. The first three parts seem to be going according to plan, but the job gains have been minimal. The President’s attempt to reform healthcare was noble, but misguided, particularly during a time of steep economic downturn. IUt seems to me that this is something that could have been put on the back burner, while the issue of jobs and economic recovery became the top concerns of Americans. The President is trying to tackle too many issues at once, including trying to settle the situation at Guantanamo Bay , reassure troops in Afghanistan that we are in it to win it, and manage the slow withdrawal of troops from Iraq . So economically speaking, the first year of “Obamanomics” is hindered by the Commander-In-Chief’s biting off a bit more than he can chew. This is not to say his plans have failed; only that it is too early to draw a definitive conclusion, and that the administration needs to focus on one thing at a time. For now the economy seems to be stabilizing and is in the embryonic stage of tedious growth. This after we looked headed for a nationwide depression—and I use the phrase “nationwide” because in many parts of the country, there was a depressioin—particularly in minority communities and in states like Michigan and Ohio .. While a definition of a depression is hard to come by, Americans do understand the symbols of one: Foreclosure signs, soup lines, banks in trouble, packed employment offices. Warren Buffet, “The Oracle of Omaha,” or better known as the second wealthiest man in America, told CNBC in an interview, “"My general feeling is that the recession will be longer and deeper than most people think," (Bruce Reznick, Bianna Golodryga and Stephanie Dahle, “Oracle’s Warning On U.S. Economy,” ABC News, May 3, 2008). Sen. Barbara Boxer (D-Calif.) said it best: “"Jobs, jobs, jobs is the name of the game." If Barack Obama can address this issue successfully—that means drop the unemployment rate (which now stands at 11%) to less than what it was when he took office, and if he can document the creation of millions of jobs, then he is likely to win a second term. At this point, he could take on the issue of healthcare and how it will be paid for. The Economic Stimulus: Aims and Aftermath: Or, This Brotha Spared A Dime In December 2008, the Washington Post reported, “Democrats are working to nail down the specifics of an economic-stimulus package of tax breaks and public spending, with some lawmakers and economists calling for even more spending than the $500 billion that congressional leaders have been discussing.” (Nat Fali Bendavid and Christopher Conkey, “Specifics of Stimulus Take Shape,” The Wall Street Journal, Dec. 10, 2008, p. A4) The administration claimed that such a program would create jobs, and they wanted to be able to accurately track the number of jobs created. They claimed that earmarks would not be part of the equation. The house would later pass 245-178 a $410b bill laden with earmarks, including $200,000 for a tattoo removal program in Los Angeles , CA . This despite the best efforts of John McCain, who opposed the more than 8,500 earmarks. 16 Republicans were in favor of the bill, and 20 Democrats opposed it. It was suggested that the most important part of this package was for infrastructure repair. The U.S. Conference Of Mayors recommended nearly 11,400 such projects for funding, which totaled more than 69 billion dollars. Funds were also to be made to offset medicare costs for states. After Congressional hearings and various public debate, the stimulus package ballooned to $700b. The final Senate compromise was $787 billion, more than 57% more than first calculated. The bill called for $110b in spending cuts, assistance for poor people in the form of a one-time food stamp payment, extended unemployment benefits and $500 in Social Security payments. It also included tax breaks to stimulate home and automobile sales. The Senate approved the measure 61-36, with only three Republicans voting in favor of it—Maine Senators Susan Collins and Olympia Snowe, and Pennsylvania Senator Arlen Specter Treasury Secretary Timothy Geitner said, “…the battle for economic recovery must be fought on two fronts. We have to both jump-start job creation and private investment and we must get credit flowing again to businesses and families." (Martin Crutsinger, “Administration Readies Overhaul of Bailout Program,” The Associated Press/Yahoo News, February 9, 2009) The Bank rescue plan, which originated during the Bush administration, was later “revamped” by the Obama administration. It called for repayment of loans by those being bailed out, and hoped to build a partnership between government and private investors to buy more than a trillion dollars in toxic assets. (That is, assets too risky for investors—such as loans likely to go into foreclosure and/or become less than the value of the loan itself). However, some economist argue that the level of toxic loans might actually be two trillion dollars. The bill was passed October 3, 2008, just 367 days removed from Wall Street’s record-breaking close. Bush, even though he was out of office, caught flak for not providing enough oversight for the firms who received money, which Obama is also guilty of. Just over a year later, many of thee institutions are still burdened by toxic assets and are still paying out enormous bonuses to the same executives who caused all the damage in the first case—all at taxpayer expense. The Obama administration has since taken a “get-tough” policy and promise that there will be no such bailouts in the future. They also conducted “stress tests” of the institutions in question, which are supposed to evaluate a bank’s financial strength and its ability to survive another economic downturn. In a speech before a joint session of Congress, the President stated, “we have lived through an era where too often short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.” The President added, “But while our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.” (February 24, 2009) The Deficit and Healthcare Reform Both economists and Congressmen warned that the stimulus package would raise the national debt to beyond 1.2 trillion dollars. White House Budget Director Peter Orszag countered that things would be worse if such programs weren’t undertaken. The stimulus was considered necessary and completed. Few in the media remembered that Obama asserted that he wanted to halve the 1.3 trillion debt he inherited to 533 billion by 2013. He hoped to do this by reducing spending, bringing the troops home from Iraq and by allowing the Bush tax cuts to expire in 2011. At the same time, the President seeks to create a national healthcare plan that can only be described as a behemoth. I find it difficult to digest the idea of trimming the deficit while tacking on a trillion dollar healthcare package. It could be done, but will take more than fiery rhetoric. Tens of millions of jobs would have to be created, to generate tax revenue. Tax receipts would have to rival those during the Clinton administration, which stood at 19.1%. According to an Associated Press analysis, “Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression. (Stephen Phlemacher, “AP ENTERPRISE : Biggest Tax Revenue Drop Since 1932,” The Associated Press, August 3, 2009 How can we possibly tame the deficit, promote economic growth, AND enact a healthcare plan that covers the vast majority of Americans/ Sure, cutting the fat from the budget is one idea, but where does the ax fall? In March of 2009, Obama suggested cutting farm subsidies and the proverbial cowpie hot the fan. Charles Abbott writes, “Foes say the idea is poorly timed and aimed at growers who account for three-fourths of farm production. Two longtime Senate backers of farm subsidy reform oppose Obama's proposal. As part of his 2010 budget, Obama proposed phasing-out direct payments to farmers with sales of more than $500,000 a year, to save $9.8 billion over 10 years. Direct payments, which total $5.2 billion a year, are paid regardless of crop prices.” (Charles Abbott, “Criticism Rains On Obama’s Farm Subsidy Cut Idea,” March 1, 2009, Yahoo News) During this time the White House also proposed a $250,000 a year cap on farm subsidy payments. More than 125,000 farmers a year earn more than twice that. Also the Federal Reserve initiated a $1.2 trillion program designed to lower mortgage rates, kick start the economy, and lower credit card rates. The Fed would spend $300b on long-term government bonds and $750b in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. (Jeannine Aversa, “Fed Launches Bold 1.21T Effort to Revive Economy,” The Associated Press, March 18, 2009). In April 2009, after the Dow plodded above the 8,000 mark, construction spending rose, home sales rose, and factory orders went up 1.8 percent, some were ready to declare that the economy was bottoming out and that slow, but steady growth was on the horizon. NEXT: THE BANKING, HOUSING AND AUTO INDUSTRY DILEMMA ADDITIONAL NOTES 1. “Bush Just Escapes Being $5-Trillion Man,” posted by Mark Knoller, February 13, 2009, CBS www.cbsnews.com/ 2. www.therubins.com/geninfo/stxposse.htm and http://en.wikinews.org/wiki/Dow_Jones_closes_at_all-time_record_high 3 "Labor Force Statistics from the Current Population Survey". U.S. Department of Labor. http://www.bls.gov/cps/. ------------ About the author: Timothy N. Stelly is a poet, essayist, novelist and screenwriter from northern California. His novel, HUMAN TRIAL, is the first part of a sci-fi trilogy and is available from Amazon.com, allthingsthatmatterpress.com and in e-book format at mobipocket.com. HUMAN TRIAL II: ADAM’S WAR is pending review and editing. Stelly also has a short story included in the AIDS-themed anthology, THE SHATTERED GLASS EFFECT, due out in February 2010. His story, SNAKES IN THE GRASS, Is a tale of love, betrayal and its deadly consequences. Reviews of HUMAN TRIAL can be read at amazon.com Visit me at: http://www.myspace.com/pittwit website: http://www.stellyhumantrial.com Email: stellbread@yahoo.com 
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