Jan

Reflecting on a Nightmare

On Wednesday evening, our President, Barack Hussein Obama, delivered his first “State of the Union” address. As the president reminded us with his opening lines, this duty of the presidency originates from the Constitution itself. Wednesday’s was the first his presidency, and millions of Americans, worried about their own financial futures, terrorism, and two ongoing war tuned their television sets to see where their national leadership stood on these critical issues. What they got was a political campaign screed that was so out-of-sync with the majority of the nation that one had to wonder if they had elected a delusional and cloistered egomaniac, whose true name very well may be Don Quixote.

So, really, we got exactly what we expected.

Despite hell freezing over, pigs falling from the sky, and the cow jumping over the moon [i.e., a Republican being elected to Ted Kennedy’s old Senate seat in Massachusetts in a special election the week prior], Mr. Obama continues to be the radical partisan ideologue, too lax on national security/war and too aggressive on domestic policy. In order that the reader won’t begin snoring – or, alternatively, reach for the cyanide – I’ll try limit my criticism.

Mr. Obama began where he had to: the economy and jobs. He claimed that jobs are his number one priority, and that the government’s actions so far have prevented a catastrophic meltdown of our financial system. Said Obama: “Economists on the left and the right say this bill has helped save jobs and avert disaster.” Well, what would this disaster have looked like? Could it be as bad as the disaster we’re in now, with unemployment at an unofficial unemployment rate is over 20%, and headed higher with more planned layoffs (from the discount retailers, now)?

To remedy the problem, Mr. Obama proposed a tax break for small business, “one that will go to over one million small businesses who hire new workers or raise wages. While we’re at it, let’s also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.”

OK, first – eliminating capital gains taxes is an unqualified healthy thing. The rest is somewhat ridiculous. Businesses are SHORT ON CASH after years of cheap borrowing and debt accumulation – for the most part, they need to trim employees, save money, and hold wages steady to pay down their debt load. This is a tax cut designed in such a way not to help businesses who need help the most, but who are already in a healthier financial position. Therefore, it will do little to stop layoffs and closures.

The second, and completely predictable, proposed solution was an old trope – more public education. Describing what might be the most backwards thing this president has ever proposed – no minor accomplishment given Obama’s rhetorical history – he said: “And let’s tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.”

Let’s try, painful as it is, to make sense of that sentence that claims to be related to job creation. First, Mr. Obama wants to cap what students have to repay for students loans at 10% of their income. Fine – but won’t expect more educational opportunities after you institute what amounts to a price control. Second, Obama wants to forgive their debt completely in 10 years if they enter public service. Yes, to restore employment, our president is proposing putting more people on the payroll of taxpayers. This, at a time when tax receipts are already collapsing and deficits are at an all time high.

Please, allow me a personal interjection here: I realize that most Americans do not have Ph.D.’s, but have we really reached a point where such an illogical, asinine, yet simply stated proposal can be said to the entire world, without someone important and connected to the President going – What are you talking about?!?!?! Do you take your citizens for fools?

At any rate, it won’t help the economy. We can be as sure of that as anything people speculate on politically and economically. So what’s the motive? Maybe this is going to fund that shadowy civilian army that Obama used to talk about? Maybe he wants the government to declare bankruptcy? Maybe he’s looking to force the monetization of debt, and the collapse of our dollar? Perhaps we can allow the possibility that he’s just a simpleton who lacks even the most basic knowledge about economics, business, and budgeting? Whichever the case, I am not reassured of our economic future, and I don’t think – for the sake of all that is Good and Right, I hope! - I’m alone on this one.

Let’s parse another sentence, this time relating to collapsing home prices: “That’s why we’re working to lift the value of a family’s single largest investment –- their home. The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments.”

I’ll be blunt – this is blatantly self contradictory. Beyond providing basic civil services efficiently, government cannot raise home values without a subsidy. The steps they’ve taken to prop up housing prices have not worked, or else the payments wouldn’t have gone down. This is day one, in Finance 101.

There was a housing bubble, remember folks? We’ve heard this, albeit reluctantly, from the same people who caused it – Congress and the Federal Reserve. This means home prices were overprice relative to other economic goods. Taking the official government explanation seriously, arrive at the necessary conclusion that the falling prices of homes is a necessary step towards the “balancing” of asset values, and the return of economic stability. (This explains the recent housing news.) Remember, that home prices must fall is the government’s implied stance after admitting there was a housing bubble. Obama cannot have it both ways: either people refinance and accept a lower home value, or the government subsidize home mortgages to hold prices artificially high, essentially creating another bubble. Obama’s comments offer evidence of schizophrenic policy – or, at least, double speak.

The president’s remarks on healthcare were so completely disingenuous and disgusting, and I will not allow this corner of cyberspace to be polluted with such cant. Suffice to say that the man has never taken any lead in the debate, outsourced all contention to Congress, almost assuredly has not read the proposed bills, and either does not understand or care that the American people resoundingly reject further statism in healthcare. Mr. Obama is results oriented, and if he can advance the ball down the field another 25 yards, it’s just that much closer to a single payer system, which is what we all know he really wants. No need to elaborate further – Obama’s aloofness, genuine or feigned, and Scott Brown’s victory in the People’s Republic of Massachusetts, say it all.

[Interestingly, the president is also working to socialize public health in foreign nations. Yes, it’s true – he said it. “And we are launching a new initiative that will give us the capacity to respond faster and more effectively to bioterrorism or an infectious disease -– a plan that will counter threats at home and strengthen public health abroad.” (Emphasis added.) Us Americans elected the President of the United States and the Red Cross!]

His remarks on the current deficits and frighteningly high debt levels were discouraging, and betray his insouciance when it comes to long term monetary and fiscal policy: “We will continue to go through the budget, line by line, page by page, to eliminate programs that we can’t afford and don’t work. We’ve already identified $20 billion in savings for next year. To help working families, we’ll extend our middle-class tax cuts. But at a time of record deficits, we will not continue tax cuts for oil companies, for investment fund managers, and for those making over $250,000 a year. We just can’t afford it.”

$20 billion? Are we supposed to laugh or cry? This is approximately 1.5% of the 2010 total deficit of $1.35 trillion. Oh yeah, and after a record year of federal spending, a level which was supposed to be temporary to “kick start” the economy (whatever that means), the president talks of a budget freeze. Let me repeat – he wants it frozen at an all time high, and still not until 2011; hence, we are NOT going to cut spending – we’re going to tax oil companies and “investment fund managers” (i.e., the people who allocate resources efficiently), in an effort to service our debt. Sirens, red lights, and loud warning announcements should be going off by anyone who has a vested interest in the perpetuation of the United States Dollar.

Are you paying attention, reader? You should be, assuming you’re not walking towards your bathtub, toaster in hand. He wants to tax energy companies – the single most important sector of any economy – and the professional investors, who are rewarded on the basis of how well they meet the economic needs of consumers. This is a recipe for disaster.

(Silly me, forgetting from one part of the speech to another… What do we need investment managers anymore, when all our new workers are being encouraged to enter “public service.” They will receive their orders from a professional planning bureau, and we can finally abolish that perfidious profit/loss system of provided by financial accounting! Sigh. Moving on.)

Predictably, Obama left terrorism and wars for the end of his speech, when the maximum number of viewers had switched channels (most likely to bow over their toilets out of sheer disgust or because they polished off their bottles of 86 proof Jim Beam after a mere 40 minutes of Obama). Such are side issues that take a back seat to destroying the healthcare system and general welfare of his fellow citizens, and you can only talk so much of Hope and Change when you’re incinerating human flesh, terrorist and innocent, with Predator drones in Pakistan. The “What the hell?” moment for me came when he said: “Now, even as we prosecute two wars…” Prosecute two wars? That’s an odd choice of words. Is this like how we now prosecute mass-murdering terrorists in lower Manhattan, for a cost of $216 million, steps away from the scene of horror they orchestrated? At that moment, I was confident that I wasn’t the only one pinching myself to wake up from the Orwellian spectacle. It’s now plain to see that Obama sees himself as top police chief of the world, rather than Commander-in-Chief of the U.S. armed forces. I mean, after all, the FBI is reading foreign terrorists their Miranda rights.

Our allies and trading partners were sparsely mentioned; the only endorsement of other nations came in the context of progress on international “climate change” legislation. Obama was excited about this, because a global tax on energy (or CO2) would provide him with a new stream of income to waste on so-called social programs. Sure, there was some talk about free trade agreements with Columbia and South Korea. All fine and good, and I support that as much as I doubt his sincerity. Ah, but then there was the ominous overtones of beginning a trade war with China: “But realizing those benefits also means enforcing those agreements so our trading partners play by the rules.” This had nothing to do with human rights violations or p0litical persectution. It was, instead, a thinly-veiled reference to China’s currency pegging. Fine, fine Mr. President… if you think Americans are interested in blaming foreigners at the moment, test the politics of your hunch. But China is buying all YOUR debt. And it’s YOUR Fed that is recklessly printing dollars, making their investment income worth less and less. So why don’t you drop the poor attempt at populism, and recognize that not even 1/4 of your spending would have been possible without those rule-breaking Chinese.

Closing remarks:

I hate to disappoint anyone who thought they saw a state of the union address. This was an out of touch diatribe delivered by narcissist, on a different planet than the country he governs and growing increasingly tired of the democratic process. Does that sound overblown? Consider his closing remarks:

“We have finished a difficult year. We have come through a difficult decade. But a new year has come. A new decade stretches before us. We don’t quit. I don’t quit. Let’s seize this moment — to start anew, to carry the dream forward, and to strengthen our union once more.” Damn the plebeian masses – full speed ahead!

Mr. President, some advice – you could not have had a worse year, and you could not have picked a worse set of priorities. If our year as Americans was destined to be difficult, you made it much worse. This New Year, this New Decade, presents an excellent opportunity for you to quit - at least what you’re currently doing. If you don’t, you’ll be a lame duck 2 years into your New Job.