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Forecasting Obama's Budget and Economic Mistakes

Submitted by aprpeh on Sun, 01/25/2009 - 23:27
in

Here is a good read making the free market case in opposition to the Obama economic plan. The article written by John Tamny of H.C. Wainwright Economics provides an important lesson in economics and the damage caused by ineffective and damaging government intervention.   Government moving wealth around, the essence of the Obama tax plan disguised as tax credits will stifle demand and not serve as a vehicle of economic growth.  Tamny points out that since no change in wealth will result from the Obama tax policy (unlike what would be the result of an across the board real tax rate reduction) it merely is a punitive measure aimed at the producers and achievers in favor of the non-producers and non-achievers in the economy. John Tamny's supporting argument as to why he believes that the Obama plan will result in slowing economic recovery is based in part upon the crowding out theory. Since government debt is now at historic levels both in real dollars and in percentage of the GDP less money can be made available for the sort of entrepreneurial activity which drives economic growth. The Obama plan at every turn takes decision making away from the private sector and replaces it with government redistribution and allocation of hard earned dollars.  The American people still have the ingenuity, creativity, and innovative spirit needed to lead the world economy if only the government will not stand in the way and not interfere with the free market's invisible hand.However, this time unlike in other recession and recovery cycles, the US government is now part owner of some of the biggest names in the financial sector and the auto sector due to billions of dollars in debt buyouts meaning, Uncle Sam sits on the boards of these companies that were bailed out. That debt belongs to all of us yet we have little to no say in demanding that those companies now partly owned by the taxpayers shape up.  Tamny points out the truth proven time after time that left alone, companies or industries are reorganized and that the bailouts are "... delaying the process whereby people and capital are managed productively. "

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hat tip to http://www.997wtn.com/custpage.cfm?frm=9347&sec_id=9377 Ralph Bristol's Nashville's Morning News, WTN 99.7

Ralph interviews John Tamny on Friday mornings.

John Tamny is editor of http://www.realclearmarkets.com (RealClearMarkets), a senior economist with H.C. Wainwright Economics, and a senior economic advisor to Toreador Research and Trading (www.trtadvisors.com). He can be reached at jtamny@realclearmarkets.com.

http://www.realclearmarkets.com/articles/2009/01/obamas_economic_solutions_are.html

Obama's Economic Solutions Are Contractionary  By John Tamny

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Comments

 Wow. For 8 years, Cheney

Submitted by In between on Mon, 01/26/2009 - 00:03.

 Wow. For 8 years, Cheney said deficits don't matter. A guy who replaced Rush Limbaugh for a day on the radio said deficits were good and/or it was a small portion of the GDP. We have heard all the excuses for 8 years. We saw Bush hide the cost of the war and put it into emergency funding and keeping it off the books to get re-elected. We saw the deficits and debt piling up 5 years ago. 

You people are something. Just lies and more lies. 

and the solution from Obama is......

Submitted by Ironman on Mon, 01/26/2009 - 07:22.

to pile up debt two or three times as fast, after he and drones like yourslf bemoaned Bush for a smaller level of deficit funding.

IB, given your often rambling posts I'm sure you understand this concept. One way to ease the pain of a hangover is to immediately start drinking again. Of course, at some point this means you get detox and not a just huge headache, but it seems like a good idea at the time.

 <<bemoaned Bush for a

Submitted by In between on Mon, 01/26/2009 - 08:21.

 <<bemoaned Bush for a smaller level of deficit funding>>

Bush has done more deficit spending than any other president. He did a "guns and butter." And that is you cannot have a war and tax cuts at the same time. LBJ did this with Vietnam and the Great Society programs and it caused 20 years of inflation. Bush created deficits and debt and never vetoed a spending bill in 6 years.

We are in a situation of having a recession and a financial crisis. All analysts that I have heard on CNBC have said the government is the last resort and it will have to flood the economy with money to get the economy going. At this point there is a fear of a "uncontrolled downward spiral" with deflation and a depression.

So, let us add up, since you want to excuse my rambling. We have a recession and possible depression, middle class jobs going overseas, factories closing, cities and states going broke, lower wages, less healthcare, less in pensions, money going to Iraq, bailouts, deficits and debt, and nothing to prepare us for the future in terms of investment and fighting globalization.

A lot of us have been hammering that something has to be done for years, and nothing has been done. We are where we are. We are racing against time and money. Bush has left this country in a total disaster, and now what can we do.

We are going...

Submitted by Progressive Tra... on Mon, 01/26/2009 - 07:08.

... through a period of massive deleveraging, and nothing is going to stop it.

I would love to see gov't initiatives to address the trade imbalance. 

nationalizing the banks would be a good start

Submitted by RisingTide on Mon, 01/26/2009 - 10:48.

add in some stimulus, and our government might not dissolve.

taht's how bad deflation is...