MINOT, NORTH DAKOTA — On Tuesday, the President addressed a joint
session of Congress. He outlined his assessment of the financial crisis
gripping the U.S. and his plan to resolve it.
One of the tragedies of Obama’s speech is the disappointment
he will inflict on those who have placed so much trust and hope in
his promise of leadership and change.
This is certainly a harsh assessment of a new President, particularly
after little more than a month in office. It is an assessment, however,
which is based on the President’s own words.
What he said — for those who actually read the speech rather than
simply listened to a rosy word-picture filled with platitudes — demonstrated
a significant lack of understanding of what makes an economy vibrant.
If the speech is an indication of his understanding of the financial
mess and how to meaningfully address it, the country should prepare
for bitter disappointment. A review of what he said demonstrates this.
1. “The ability to get a loan is how you finance the purchase
of everything… and [how] businesses make payroll.” Businesses
do not make payrolls with loans. Those that do, don’t stay in
business; they fail.
2. “A surplus became an excuse to transfer wealth to the
wealthy instead of an opportunity to invest in our future.” The President
believes that taking less from those who earn it is a transfer of wealth
to those people. Government redistribution has never created wealth.
Wealth is created when those who earn it are permitted to invest it
as they see fit, not as government deems.
3. “Over the next two years, this plan will save or create 3.5
million jobs. More than 90 percent of these jobs will be in the private
sector.…” Since 2000, total private sector jobs increased
by 3,456,000. In this time of contracting economic activity, can this
happen or is it just wishful thinking?
4. “Because of this plan, there are teachers who can now keep
their jobs and educate our kids…. And we have provided the resources
necessary to prevent painful cuts and teacher layoffs that would set
back our children’s progress.” Has anyone heard of a single
public school district in the U.S. that is laying off teachers, except
where the student population has dropped?
5. “So I ask this Congress to send me legislation that places
a market-based cap on carbon pollution and drives the production of
more renewable energy in America.” How many understand that
this proposal will artificially and unnecessarily increase the utility
bill for more than 80 percent of America’s households?
6. “I understand that when the last administration asked
this Congress to provide assistance for struggling banks, Democrats
and Republicans alike were infuriated by the mismanagement and results
that followed. So were the American taxpayers. So was I.” Why
was he infuriated? He was a major proponent urging Congress to pass
the Troubled Assets Relief Program (TARP). The “mismanagement” and
lack of transparency came about because the measure specifically did
not require transparency or accountability. If the members of Congress
are infuriated, all they need to do is amend the bill. They have done
nothing. And only half of the funds were distributed under Bush; the
balance is being distributed under the Obama administration.
7. “We have done more to advance the cause of health care
reform in the last thirty days than we have in the last decade.” What
has been provided is health care insurance — not health care reform.
Nothing has been done to reform a health care system that is bloated
by massive Medicare and Medicaid mismanagement, the failure of tort
reform, and the lengthy approval process for new medications imposed
by the Food and Drug Administration that delays the availability of
new drugs and adds substantially to their costs.
8. “But I also know that nearly a century after Teddy Roosevelt
first called for reform, the cost of our health care has weighed down
our economy and the conscience of our nation long enough.” The
cost of health care did not begin to “weigh down” our economy
until after the full impacts of Medicare and Medicaid that began in
the 1960s. The advent of the third-party payer system that effectively
removed accountability and oversight on medical billings has done more
to increase medical costs than all the electronic efficiencies will
9. “And a twilight struggle for freedom led to a nation
of highways, an American on the moon, and an explosion of technology
that still shapes our world.” This is certainly a delightful sound bite.
The question is, what was the twilight struggle for freedom and how
did it lead to a nation of highways? Hollow rhetoric does not advance
10. “We will soon lay down thousands of miles of power lines
that can carry new energy to cities and town across this country.” I
am uncertain who “we” is. I am confused as to what the
point of this statement is. What does it have to do with this “recovery
plan,” if anything?
11. “And we will put Americans to work making our homes
and buildings more efficient so that we can save billions of dollars
on our energy bills.” As a builder for more than 30 years, I can
state unequivocally this is a fiction. It is simply cannot be done.
12. “In fact, the recovery plan provides a tax cut — that’s
right, a tax cut — for 95 percent of working families. And these checks
are on the way.” If there is a tax cut, why does a check need
to be issued? Shouldn’t less simply be taken in withholdings?
13. “I’m proud that we passed a recovery plan free
of earmarks.” Yet news reports identified up to 9,000 earmarks in
Congress’ $410 billion omnibus spending bill.
14. “In order to save our children from a future of debt,
we will also end the tax breaks for the wealthiest 2 percent of Americans.” This
should be a relief for 98 percent of Americans. However, does it seem
a realistic that 2 percent of Americans are going to pay off a federal
debt estimated to be between $12 trillion and $19 trillion?
The particularly troubling aspects of the President’s speech
include the following:
• The recovery plan will be directed entirely from Washington,
• The plan is being managed and directed by the same people
who were in charge when the problems occurred — the members of Congress.
• Apparently, Congress was powerless to stop the mess we are
in and had little or no responsibility for it.
• He believes 2 percent of taxpayers will save our children
from a future of debt.
Words do not repair decades of financial and regulatory mismanagement,
nor do unrealistic promises. More to the point, the wishful rhetoric
and the President’s clear misunderstanding of how markets work
demonstrate a failure to grasp the fundamental problems of our financial
system and the most effective means to fix them.
For those who listened carefully and understand how sustainable jobs
and prosperity happen, the President’s speech was a terrible
release of this column.
A Voice from Fly-Over
A Voice from Fly-Over Country is copyright © 2009 by Robert
L. Hale and the Fitzgerald Griffin
All rights reserved.
Robert L. Hale received his J.D. in law from Gonzaga University Law
School in Spokane, Washington. He is founder and director of a non-profit
public interest law firm. For more than three decades he has been involved
in drafting proposed laws and counseling elected officials in ways
to remove burdensome and unnecessary rules and regulations.
See a complete biographical sketch.
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