Obama Goes From Stimulus to Austerity

Posted by Michael A. Kamperman on April 9, 2011

The President, who has no economic soul, has moved in two short years from one in favor of Keynesian style stimulus to one in favor of Austrian style austerity.  He told the Country last night that America needs to live within its means, and he hailed historic budget cuts as necessary.  Hoover took the same austerity tack and look at how that worked out for him.  Britain has recently taken significant austerity cuts and the economists who predicted an upswing in private sector confidence are shocked to discover an unfolding economic downturn.  In Texas, our legislature is fighting over who can out Tea Party who.  The result is our local Waco School District just announced they have told 200 teachers they can either resign, or be terminated for the next school year, by Monday.  Headlines like these are the result of austerity.  It doesn’t actually instill confidence now does it.  This is what the President is congratulating Congress for doing and saying is necessary.  If no Democrat challenges the President in the primaries, then the Democratic Party will simply prove that they crave power over principle.  The Republican Party has left many people, including me.  Ronald Reagan preached about Morning in America.  He talked about what the U.S. could do.  Now, our party simply focuses on what the U.S. cannot do.  By stripping education funding they are forfeitting our future.  By stripping mortgage funding they are laying waste to Middle Class wealth.  Apparently the old saying is true: “there’s not a dimes worth of difference between Democrats and Republicans.”  Where are those who believe our country has the resources to solve our economic problems supposed to turn to?

The austerity cuts have not hit en masse yet.  The stimulus plan is still funding many things through this summer, then for the most part it is over.  The teachers being let go won’t have a job come August.  In Texas it is anticipated that over 300,000 jobs will be lost if the legislature cuts the $23 billion the House passed last week.  That would increase the unemployment rate by almost 3% in Texas.  All of this is on top of a Middle East that is on fire pushing oil prices past $110 per barrel.  Oil will go higher as long as the political fires rage in multiple middle east countries.  Also, we still don’t know the impact of the Japanese Tsunami and subsequent nuclear meltdown on parts or suppplies in multiple industries.  An economic downturn looks baked in the cake for the second half of 2011 even if the Fed moves forward with QE3.  If they cave, then the downturn could turn real ugly.  Probably not as ugly as the post Lehman downturn, but plenty ugly.

It is all so unnecessary.  It is the result of believing that our country is at risk because we owe China a piece of paper worth $1 trillion.  We don’t owe anyone oil, gold, wheat, pharmaceuticals, computers, or real estate.  We don’t owe anyone a single tangible asset.  We simply owe paper that we can print out of thin air.  We don’t even owe anyone their paper, we owe them ours in which we remain in full control.  Washington is now a lot like the story of Chicken Little.  Everyone is running around saying the sky is falling, the sky is falling.  Panic, hysteria, over nothing.  A powerful country with the wherewithal to solve its own problems shrinks in the face of fear itself.  The solutions being offered are to feed our young to the foxes and the wolves.  Sad, really sad.  So many easily solved problems deemed insurmountable because of a deficit we could and should run.  Save us Obi-won, save us.