It is this song by the Great Hank Williams Jr. that best encapsulates Obama’s new “American Jobs Act,” which was introduced to Congress last Monday. Whether a teenager addicted to pornography, a crack-head to crack, alcoholic to cheap whiskey (“Ten High” is not good whiskey), or Obama to tax payer dollars – old habits are hard to break. Old habits die hard, despite the knowledge that you have a problem and knowing how it affects other people. You would have thought our unprecedented loss of our AAA credit rating would have been the slap this administration needed. But as Obama rolls out his $450 billion spending plan, further eroding the so-called “cuts” made during the debt ceiling crisis, he clearly is in denial or has no incentive to fix his and Washington’s addition to cash.
Obama has repeatedly said his spending plan "will not add a dime to the deficit,” yet has not yet spelled out exactly how he intends to pay for the package. He has specified zero cuts and zero revenue generating proposals to accompany his latest barrel of pork – and they though George W. Bush had fuzzy math!
So is Obama really this stupid? Actually, no he isn’t. Once again, the master of rhetoric has manipulated the current situation into a win-win situation to further propel his sociopathic narcissism and hunger for power and self-glorification to new, and uncharted, heights! If this Jobs Act fails, the Republicans are seen obstructionists. If the jobs act passes, he gets what he wants and “reinvigorates” [bribes] his base of support with cold hard cash. Money will be funneled to union jobs (especially the teachers) and artificial short-term “shovel-ready” construction jobs. These things do nothing to solve the problem the economy faces, lack of demand and confidence. Not even the payroll tax cuts will stimulate growth because there is nothing to grow!
Additionally, the policy of government stimulation of the economy is taking us down a path that can harm us forever. I published an article way back in 2009 on an online magazine that no longer exists, Overtone Magazine. I warned about the ever growing “Governmental-Industrial Complex.” I echoed the sentiment of President Eisenhower’s warning of a “Military-Industrial Complex.” Eisenhower thought it was dangerous to have such a huge chunk of the economy and labor force dependent upon the government. In his era, it was the ever growing military that concerned him. If society has such a heavy stake in an aspect of government it becomes politically unpalatable to cut and eventually it balloons to the point where you can no longer cut it because it would have very far reaching affects. Hence, our defense spending continually soars and our massive Army is left standing long after the wars to end all wars have concluded simply because of the economic engine they provide. This, thereby, creates a Military-Industrial Complex that survives to this very day. I am not saying that big military spending is a good or bad thing at this time, that’s for another discussion. But this economic dependency has become a reality whether we support the relationship or not.
Now, imagine this type of dependency on a grand scale - the whole economy riding on government spending, thereby creating a “Governmental-Industrial Complex!” There was a $158 billion stimulus in 2008, a $787 billion stimulus in 2009, and a defacto stimulus in 2010 that came with the compromise to extend the Bush Tax Cuts. This is also accompanied by unprecedented levels of spending in the annual budget. In 2011, we are now proposed with yet another silver bullet – another stimulus! Does anyone see a trend here? The economy is starting to become reliant on unsustainable government cash-flow to prop it up. If the economy starts to indicate a downward trend, rather than purifying itself through the free market, government is pumping money we don’t have into it in order to calm political pressures. Like the Military-Industrial Complex still in full force today, this Governmental-Industrial Complex if fully formed will not simply go away.
A healthy economy sustains itself. Government spending merely creates an artificial apparatus to imitate the free market. Without the apparatus, all collapses. In economic terms, government money shifts demand and makes what’s left of the private sector unpredictable and impossible to fully recover. While I dabble in stocks, I am no economist - but it seems to me that as soon as government money dries up stocks fall and economists panic. I believe the reasons are two-fold:
(1) Government money alters free market demands and makes it hard to gauge the quality and relevancy of a product. For example, are people buying green technology or new healthcare equipment because they are good technologies or because government flips half the bill? Perhaps a better question would be, would consumers of these technologies be willing to buy the technologies even without funds? Government money distorts these very fundamental questions.
(2) It’s hard to calculate how government money affects the economy. Is a department store profitable because there are good jobs in the area that are based valid consumer demand or is there government money trickling downward somewhere along the line? This indirect effect is caused by the “money multiplier” generally touted in stimulus packages. The idea being that $1 spent brings $2 in wealth to an area through indirect services. If that initial $1 is from the government and it dries up, the effect is gone and the ramifications unpredictable. How can the markets gauge what is a true market demand and what is true market wealth?
If we simply purged the market of its inefficiencies and flaws in 2008, the economy would be much better off today. Unfortunately, thanks to our government’s reckless spending, these market failures still exist. Without a clear picture of the state of our economy, unclouded by government cash pollution, we will never rebuild and grow. We will stagnate at best, which is exactly what we are doing.
Old habits are hard to break, but when it comes to government spending they generally never break. From this premise we must decide if we want to walk the way of socialist Europe and hop the Obama spending train or reclaim the American spirit that built us a continent.
