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Wednesday, July 15, 2009

Rebuilding Something Better: My Rebuttal


On July 12, 2009, The Washington Post published a column written by President Barack Obama titled “Rebuilding Something Better.” Upon reading it, I jumped at the chance to write a respectful rebuttal to counter some of the points the President had addressed. The President’s article can be found here:

“Nearly six months ago, my administration took office amid the most severe economic downturn since the Great Depression.” (1)

The article begins with the President reminding everyone that he inherited this recession from the previous administration. While the President is correct on his assessment of inheriting a recession, it seems he is going out of his way to remind us every time we hear him speak. Everyone knows this did not start on Obama’s watch, and he cannot be blamed for an economy before he was elected. Still, Obama seems destined to belabor this point. The American people grow tired of continuously hearing public officials place blame on their predecessors. The sign of a true leader is one who accepts the situation, takes ownership of the problem, and leads their way out. We have yet to hear our President assume full ownership of this recession.

In addition, we hear the President time and time again referring to this economy as “the worst since the Great Depression.” Rhetoric like this may get people’s attention during a speech, but it is completely false. In November of 1982 unemployment reached 10.8 percent. That same year, the inflation rate was 4.59 percent which was down from 14.76 percent in 1980. The inflation rate today, according to, is -1.28 percent. Unemployment would have to surpass 10 percent coupled with 14 percent inflation for the President to label this economy as the worst since the Great Depression. (2) (3)

President Obama also stated the following:

“We also passed the most sweeping economic recovery plan in our nation's history.” (1)

“The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall. So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall.” (1)

I find it peculiar how the American Recovery and Reinvestment Act was rushed through Congress, and we could not waste a single day. We did not have time to wait for our representatives to read the 1,200 page bill. This had to be passed immediately or our economic situation would become dire. In another article written by President Obama back in January, he said “If nothing is done, this recession could linger for years. The unemployment rate could reach double digits.”(4) The most recent report showed June unemployment topping 9.5 percent. As of today, we are less than one percent away from reaching the disaster our President was claiming the bill would save us. After passing a bill with spending in excess of $750 billion, it appears we are going to reach double digit unemployment after all. Now, our President says this was a two-year program from the beginning, and we have to wait to give this time to work. If we were supposed to wait two years for it to work, then why did it have to be rushed through so quickly? The truth is this bill was hijacked by Pelosi and was filled with all kinds of things to make her constituents happy.

President Obama mentioned the following:

“There are some who say we must wait to meet our greatest challenges. They favor an incremental approach or believe that doing nothing is somehow an answer. But that is exactly the thinking that led us to this predicament. Ignoring big challenges and deferring tough decisions is what Washington has done for decades, and it's exactly what I sought to change by running for President.” (1)

Many well known economists agree this bill has done nothing to address the economy. If we had two years to wait then perhaps we should have passed legislation that has proven to “stimulate” the economy such as lowering corporate tax rates or suspending the capital gains tax. Contrary to what our President might think, doing nothing actually is an answer. Doing “nothing” is actually an economic philosophy called “Classical Economics.” Classical Economics is still taught today in major Universities all over the world and has been practiced for hundreds of years. I will go out on a limb and make the claim that doing “nothing” would put us in a better situation than we are today. The stimulus bill provided no assurance to the investor that the American economy is a safe place to make an investment. Many people are waiting to see what the hike in tax rates will be to address the outrageous deficits which have occurred under Obama’s leadership. Until Congress and the President can assure the investor that their money is safe from excessive taxation, America will not see real recovery any time soon. Instead, our government talks about more stimulus and universal health insurance. All of this adds up to more spending which will continue to weaken the dollar and do nothing to address the recession.

President Obama went on to say:

“That's why we've set a goal of leading the world in college degrees by 2020. Part of this goal will be met by helping Americans better afford a college education. But part of it will also be strengthening our network of community colleges.” (1)

“We believe it's time to reform our community colleges so that they provide Americans of all ages a chance to learn the skills and knowledge necessary to compete for the jobs of the future. Our community colleges can serve as 21st-century job training centers, working with local businesses to help workers learn the skills they need to fill the jobs of the future. We can reallocate funding to help them modernize their facilities, increase the quality of online courses and ultimately meet the goal of graduating 5 million more Americans from community colleges by 2020.” (1)

I cannot completely comment on the President’s plan without seeing the plan in its entirety. Getting more kids through a community college is a noble idea and sounds great coming from any politician’s lips. However, I view anything our government does with great skepticism. For starters, an Associates’ degree is better than high school education, but most of the quality white-collar jobs require a Bachelors’ degree. How exactly is the President going to make community college more affordable? Where is the money going to come from? Are taxes going to go up or is this going to be another social program we will not be able to pay for? One thing is for sure - the more people that have degrees, the less important they will become. A high school education used to be enough to get a good paying job 40 years ago; but now high school is less important because almost everyone has finished high school. The same will be true with college degrees. Many people do go back to college during down economies. Why can’t we leave that alone to run its course? When our government talks about making college affordable, I shrug to think about how our government also wanted to make housing more affordable, and look how well that has worked for us.

Finally, the President said:

“Providing all Americans with the skills they need to compete is a pillar of a stronger economic foundation, and, like health care or energy, we cannot wait to make the necessary changes. We must continue to clean up the wreckage of this recession, but it is time to rebuild something better in its place.” (1)

As for healthcare, I have said before I prefer a free market approach to the problem as opposed to universal care or universal coverage. Our President has never addressed how he plans to handle the illegal aliens or the millions of people who already have access to government or private insurance but choose not to take it. President Obama talks about addressing energy, yet he attacks any company who wants to increase the supply of energy. I have yet to hear him talk seriously about building nuclear plants. Instead, I hear him push for Cap and Trade legislation which has been proven to impact the supply of energy and increase costs for everyone including the low income people he claims to be helping. In a down economy, we shouldn’t be holding back any companies that would like to expand by supplying America with more jobs and more energy.

I still believe President Obama means well and really wants to help people. He truly believes in the policies of his administration. I did not vote for him, but he is still my President and the President of the United States. He has a different view of what America should be and he appears to believe we should follow a European model in which the government has a larger role as opposed to the individual. This philosophy is at odds with what our country was founded on and what has made this country great.

The last sentence in the quote above bothers me more than anything else I read in this article. I worry about exactly what our President would like to build in America’s place given his voting record in Illinois and the legislation he has proposed so far as President. If we want to see a recovery, then our government has to start listening to the concerns of the people who have the money to save this economy. That money doesn’t exist with the average working man or our government. That money can only be found in high net worth private investors. These are the very people President Obama routinely attacked on the campaign trail. President Obama’s history as a community organizer and voting record as a Senator shows he is behind the average working man, but at odds with most wealthy private investors. The President is expecting the very people he spoke out against on the campaign trail to open their coffers and invest some money in America. President Obama needs to change his view and provide some incentives for these people if he expects any of them to risk capital in a falling economy. If these people are not addressed in some way, this crisis will linger on for years and we will most certainly see double digit unemployment.





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