Thursday, April 30, 2009

The Audacity of Obamanomics

Part of the issue that one might have upon reviewing the $787 billion dollars of stimulus passed by the Congress and signed by President Obama is the realization that the stimulus isn't really intended to stimulate so much as it is to radically alter funding priorities for some years to come. Included in the stimulus are substantial funds for Head Start, Pell Grants, Title I, and various other social programs that have little to do with creating jobs and everything to do with resetting budgetary priorities. Back when the stimulus was being bandied about as a nearly one trillion dollar bill, I had serious questions about it. After downloading the House version of the bill, I objected quite vociferously to the content.

I contacted every Republican Senator and moderate Democrat via email and by phone, and attempted to encourage their staff to relay a message to them that in effect, Jay Bates of Mobile, Alabama strenuously objects to content of the stimulus and the scope of its spending. As has so often been the case, I was on the losing side. Principle often is. The stimulus prevailed, albeit in a markedly smaller version.

I feel that I have learned a lesson from my college years that many of our elected representatives would do well to pay heed to: namely, that you can have whatever you want, so long as you figure out a way to pay for it. Taxes are that way, but Democrats rightly recognize that Americans are accustomed to getting something for nothing. We've had two wars over the past decade, and we've had tax cuts to accompany both of those conflicts.

We've had record expansion of home ownership, never mind that many of the homeowners weren't solid enough financially to afford the homes that they bought with government backing and encouragement. Predictably enough, we've had record home foreclosures. Available credit lines to consumers approached a trillion dollars, and credit card companies were sending out four billion offers a year to Americans soliciting them to sign up for even more debt.

As it stands, I pay four hundred dollars month to retire old debts from college. After spending my late twenties in a fog of idealism and good intention, the direct effects of which were that I took two teaching positions paying under twenty thousand dollars a year and waited for the Lord to make it rain to where I could pay off my credit card debt from college, I have come full circle. Eventually my country will come full circle from this haze that it currently exists under and realize that unsustainable debt is a bad thing.

Americans are a spoiled and stiff-necked people, and the price of their hubris is the debt that they have laid up for future generations. It used to be that we asked ourselves what our decisions would mean for our children and our children's children. This was the way we measured the sustainability of our policies and programs. Americans seem to have exchanged that sense of responsibility for what we bequeath to future generations for the simplistic attitude of Dick Cheney: “Reagan proved that deficits don't matter.”

We want immediate gratification, and we want it yesterday, and we don't believe that there are any limits to what America can do, because believing in limits to our own exceptionalism is a form of anti-patriotism. Patriotism isn't the same thing as idealism. It's a realistic acknowledgment of what deserves acclaim about our nation and its culture along with a full recognition of what it is that deserves our dissent as thinking citizens who participate in our democracy.

There was a time a few years back when I believed that the American government no longer represented the people, and that it should be overthrown as a result. Over the past few years of trying to mount an activist response to the problems of our society, I have come to realize that American government represents the ignorance and arrogant hubris of our citizenry quite well.

Our economic ills are simple enough to identify: we don't invest for the long term. We short our reinvestment into equipment and capital costs like factories at the highest corporate levels. At the homeowner level, we try to endlessly scrimp and scrounge by pursuing not the best buy, but the lowest price. We have gotten what we paid for.

While Wal Mart has risen at an unfathomable pace to claim a place in the top two spots of American corporate largesse, its workers have to rely on over 2 billion dollars in government aid for things like food and medical care in order to get by. That's 2 billion dollars that aren't used for education, or infrastructure improvements, or innovations in defense technology...those dollars are instead used to make up the gap between what Wal Mart pays its workers and what they actually need in order to live. I am a capitalist, but I believe that companies have a social obligation to their workers much as their workers have a social obligation to their employers. Wal Mart makes around 11 billion a year in profits.

In light of that fact, I don't see where taxpayers should be footing the bill for the care and feeding of Wal Mart employees who put in a day's work. But it doesn't matter. Americans pour money into Wal Mart hand over fist, without regard for the significance of what they are supporting. In the meantime, the breakdown of our nation's social fabric and community life becomes ever more pronounced and social stratification builds and builds, expanding and threatening to detonate into a populist outcry at some point that will have the inevitably costly aftershocks that all that populist outbreaks do.

Americans of all walks of life will protest that Wal Mart generates sales taxes and property taxes to offset the 2 billion dollars it costs taxpayers to subsidize Wal Mart employees. Wrong again.

The ingenious part about how Wal Mart functions is that it comes into a community under the guise of being the world's best and most efficient retailer as far as retail practices go, when it is in fact the ruthless efficiency with which Wal Mart strikes deals with county commissions and municipal governments that gives it an edge. Wal Mart typically doesn't turn over sales taxes to local government. It holds back those revenues in order to cover the cost of construction for its big box supercenters.

It also receives a property tax exemption as well. The businesses that Wal Mart drives out of existence don't have such exemptions or arrangements. They generate sales taxes, and property taxes, and income taxes...but because they don't possess the size to push local governments into advantageous arrangements that transfer the cost of buildings and equipment from their balance sheets to the taxpayers, they fall prey to Wal Mart's model. The days of merely succeeding or failing on the merits of your business model alone are gone. If you don't have a lobby, you don't have a game plan. Businesses that don't receive tax credits usually find that their way of doing business is increasingly obsolete.

This is obscene. It is socialism, but the American people don't see it as such. They see socialism as something that benefits the poor and indigent, not the Fortune 500 companies who come into their towns and cities with big box stores and deeply discounted merchandise. Local businesses don't stand a chance against a socialized and subsidized big box retailer, and the trend towards the Wal Marts and Best Buys of the world is exacerbated daily by short sighted municipal leaders and their constituents who call the regressive practices of Wal Mart progress and miss the irony altogether.

In paving the way for Wal Mart, municipalities cut out their own tax bases, for the businesses that fall before Wal Mart's advance are the ones who generate taxes which fund police departments, fire departments, and local schools. Why do they do this? Their own citizens compel them to. After all, if you don't roll out the carpet for Wal Mart, someone twenty miles down the road will.

America is in crisis. It's citizens routinely compel their elected officials to engage in practices that are tantamount to economic community suicide. The institutions we all recognize as serving a common interest, such as the police, the fire department, and the school system, are faltering in the process because they are starved of funds. The money paid to big box retailers isn't money that stays in the community. Big box retailers usually set their payroll at ten percent of revenues, and whatever portion of the other ninety percent of revenues that is profit flows out of our cities and towns and into the pockets of faraway shareholders. Contrast that with the money paid to locally owned businesses who actually pay full property taxes and turn over the sales tax receipts to local governments.

Conservatism is a doctrine that at its core respects traditionalism and institutions. It upholds community. Today's conservatives do nothing of the sort. They are the ones manning the front lines to see our schools plowed under, our police and fire departments privatized, and government services provided not to citizens who pay taxes, but to citizens who can pay a fee in addition to their taxes to private enterprises who appropriate public services.

The end result of modern conservatism is the end of community, and the fulfillment of the individual at the expense of all else. Those individuals who don't have the money to pursue their fulfillment will have to deal with a less than satisfying existence in which basic needs like food and shelter are scarcities, but those individuals who do possess money can live to the fullest of the innermost desires. This is not conservatism, it is hedonism.

In conservatism, we uphold the freedom of individuals in order to enable the individual to exist in a society where he can of his own volition choose virtue. What is virtue to us? Self-subsistence and self-reliance, no more and no less. It is not a license to gluttonous consumerism and unlimited consumption.

It is a sign of the intellectual poverty of modern conservatism that this is not recognized and deplored by those who claim the mantle of our movement. Instead, they deplore the crass themes of rappers who denigrate women lexicographically while overlooking the vulgar consumerism that appears in every rap video. Rappers who escape the hood don't care to go back as bodhisattvas in order to show their fellow man the way out of the ghetto. Instead, they are unabashed capitalists and conspicuous consumers.

It isn't merely enough to have a car, one must have a car that costs in excess of half a million dollars while rapping about the days of government cheese and living in fear of being shot while trafficking narcotics to make money to survive. This is what Americans aspire to. They don't aspire to a better life, they aspire to a life that exists as a repudiation of all that they were in the past. Roots are important.

There is no shame in having been poor. There is a shame in attaining means and then squandering those means to erect a lifestyle that was meaningless in substance and unsustainable in expense even to those with the greatest of means. There's a problem in America for certain. It isn't one of means. Americans have at their disposal vast resources and advantages that others can only dream of. It is a problem of disdaining even this vast largesse in order to covet something even greater, and in the process the material and spiritual advantages of our Republic are wasted in pursuit of the unattained ideal that we covet.

We had a 15 trillion dollar economy that dwarfed the world's other economies. China, Japan, and the European Union combined could not equal our economy. Rather than managing that largesse as wise stewards, we squandered it and destroyed not only a good bit of our own wealth and prosperity, but exposed the rest of the world to great sacrifice and risk as well.

The audacity of Obamanomics is that it does not tell a stiff-necked people anything other than what they want to hear, in spite of the fact that they desperately need to hear the truth from a man who possesses their respect and commands their attention. If anyone could get Americans to listen to the reality of our situation and comprehend what must be done in order to restore our position, it surely must be this President, who has from his early career on demonstrated an ability to transcend limitation and captivate audiences with his oration and the substance thereof.

However, it remains to be seen if he wants to risk political capital and standing in order to tell the truth. Obama has shown rare gifts in his tenure as a politician. It is unclear whether or not he possesses the moral courage to speak truth to the masses about the harm that their lifestyle and covetousness has wrought not only on our economy but on the world economy at large. Americans have an abominable track record where their reactions to politicians speaking truth to their power are concerned. See Jimmy Carter's “malaise” speech, which at the time was the most candid and forthcoming speech of American politics in nearly a century. Also, see Ron Paul's linking of American policy in the Middle East with the blowback of 9/11.

Both were mocked and derided, and both candidates lost shortly thereafter. If Obama really wants to inspire America, he could use his considerable talents to present the truth of our suicidal and damnable ways to us in order to call us to repentance and a renewing of our sense of community and those traditions that made us great. Of course, if Obama wants to coast through his first four years, he can continue peddling platitudes and budgetary outlays to us that will only compound our long term problem while making us feel wonderful in the short term. We shall see.

Wednesday, April 29, 2009

Barack Obama has reached his 100 day yard marker, and contrary to the shrill Republican voices on A.M. talk radio and in Congress, the world has not come to an end. It's amazing that individuals who profess such faith in the indefatigableness of America manage to have such little faith when a liberal Democrat is elected. That said, at the conclusion of every President's first hundred days, the pundits and prognosticators gather to critique and to grade the progress of the new Administration. In that spirit, I offer up my review of our 44th President's first hundred days as a conservative who voted for Obama. Yes, I voted for Obama and not against McCain. I can say that. Say what you will, we knew what we were getting with Obama. McCain was a man who adopted stances that just eight years before he had rightly condemned, and even posed on stage hugging the man whose operatives had mounted a slur campaign of invidious race baiting in the South Carolina primaries to save their candidate's chances for the White House. But enough about that...without further ado, I give you my thoughts on Barack Obama's first 100 days in office.
The Cabinet nominees:
This was perhaps the area most fraught with missteps for Obama's newly minted transition team. From Tom Daschle's tax issues to Timothy Geithner's tax issues, to Kathleen Sibelius's tax issues...well, the entire episode proved one or both of two things: first, our tax code is in dire need of simplification and reform; and second, our elected officials rely on taxes that they themselves are not always enthused or diligent in paying to fund programs the rest of us do not always agree with or feel enthused about paying for with our own tax dollars.
To date, while Tom Daschle's issues proved to be his undoing, Timothy Geithner and Kathleen Sibelius slid by confirmation. However, the tax issue alone has dissuaded a good many from even bothering to consider government service, and when combined with the questionnaire required of prospective applicants, the two filters have managed to keep a good many from even going forward with the process of joining the Administration. This is why Timothy Geithner has few if any permanent senior staff in his Treasury Department.
And then there are the miscues of the confirmed nominees, such as Janet Napolitano's Homeland Security report which labeled pro-life Americans and soldiers returning from the Middle East as potential terrorists. While George W. Bush rightly took heat for enabling an atmosphere in America in which those who held contrary views to the Administration's views where the War on Terror was concerned, Napolitano seemed rather stunned that anyone would disagree with her department's characterizations of pro-life Americans and former soldiers.
To boot, Geithner seemed determined to press forward with a TARP bailout despite the fact that many American (including some notable economists) criticized the lack of controls and conditions attached to the funds. Predictably enough, trouble soon arose. Wall Street handed out 18 billion bonuses alone for the final quarter of fiscal year 2008, stoking populist outrage in the process and calling attention to the fact that the government had managed to hand over taxpayer money without any conditions whatsoever that might allow officials a recourse to prevent such embarrassments. Following on the heels of this came news that AIG's 61 billion dollar 4th quarter loss (the largest ever in American history) was accompanied by 163 million in retention bonuses for executives from the unit responsible for the bulk of that 61 billion dollar loss. On top of that, that purported reason for the bonuses, that of retaining executive talent, rang hollow when it was revealed that over fifty of the individuals receiving the bonuses no longer worked for AIG.
Outrage grew and grew and grew. However, most of it was directed not so much at the government, but instead at Wall Street, where bonuses and compensation were clearly not linked to performance. A government that had governed by intervening to save the economy from total implosion with a bailout was now helpless in the face of malefactors of wealth who threatened to give back their bailout funds if conditions were imposed to restrict their pay packages. The nerve of those men was what struck most of us. And here recently the nerve has grown larger and more pronounced: despite the fact that Wall Street's financial sector profits are due to the assuming of bad debt by the taxpayers, Wall Street's bankers and financiers have quietly set aside 36 billion for compensation.
The grade I'd give the cabinet is a C-. They're about average as cabinets go, tone deaf to the growing outrage of the people, and dismissive of their input because the people aren't experts. Given that many of the experts like Larry Summers, Timothy Geithner, and Ben Bernanke were around for the deregulation that enabled our current economic implosion to occur, I would say that they didn't know what the hell they were doing on many levels either. And yet here they are, the gang whose expertise created the mess, all in place to for a second chance to show themselves as something other than hubris laden ne'er do wells.
The Economy:
We've got a slight issue here. The economy is hovering at around 8,000 in the stock market, but this is largely due to the fact that the bad assets of banks are no longer their problem. They are the taxpayer's problem, and the Federal Reserve's problem. As such, banks can now report profits in the place of losses.
The deregulation that led us to the current day hasn't been repealed, and no one is seriously proposing that we put regulatory safeguards in place to prevent a recurrence of the current crisis. In fact, despite the fact that we know exactly what the problem is, our leaders in Congress and in the current Administration are showing an obtuse unwillingness to address Gramm-Leach-Bliley and the Commodity Futures Modernization Act and therefore eliminate the potential for a new problem later on.
We're looking at a $1.75 trillion deficit this year alone, and despite that reality, the Federal Reserve has continued to make money plentifully available to whoever wants it. It's lending rates are still near zero. The problem in America isn't a lack of money. We have plenty of money available to lend, but banks aren't lending it, and this is the first wise thing that they've done in some time. It seems that they've had an epiphany that some of us can't afford either the debt that we have or the debt that they might offer us.
The GDP suffered a 6% contraction in the first quarter of 2009, and home sales and prices are still declining. The reality is this: our economy needs jobs to start expanding again, but it's been wired for three decades to run on debt. We don't have a manufacturing sector that can generate and sustain a real economic recovery as a result. The stimulus package of $787 billion simply failed to address the fundamental structural issues with our economy, namely that manufacturing has fallen behind the finance sector.
Furthermore, without a reasonable money policy emanating from the Federal Reserve, the situation is likely to continue worsening. Unemployment is at nearly 9% and rising, and the total number of Americans who make less than they need to pay their bills and stay afloat is also increasing. Combine the two camps, and you've got a 20% underemployment and unemployment problem. Who would have thought that the close of the first decade of the 21st century in America would see tent cities being erected outside of Los Angeles and St. Petersburg?
I'd give the economic performance of this Administration an F. Many Americans aren't feeling the pain just yet, but as things tighten up, they inevitably will. If the failure to address the deregulation of the Clinton and Bush years results in a second implosion later on, we could be looking at a problem of historic social significance. Right now, the nutcases demonstrating in the streets at Tea Parties are the fringe. If the deregulation and manufacturing issues aren't dealt with, we could see them become the mainstream within this Administration's first term.
Iraq and Afghanistan:
The President campaigned on withdrawal from Iraq. He's backed away from that virtually from the beginning of his term. Yes, our troop presence is declining. But the exact time when we'll be out of Iraq is unclear, and the failures of our Afghan strategy are becoming clearer daily.
Instead of decapitating Al Qaeda and the Taliban, we've simply pushed them into Pakistan, where they are now within 150 miles of that country's nuclear arsenal. They control vast swaths of territory in that country, and their encroachment is growing. The tragedy is that we know exactly how to strategically cripple both Al Qaeda and the Taliban. We could destroy the poppy fields in Afghanistan and virtually strangle their revenue.
However, in the name of diplomatic nicety and preserving a puppet government in Kabul, we won't. And that is likely to be our legacy in Afghanistan: we didn't bring democracy to the country, we brought a corrupt regime to power that rubber stamped our policies and practices on the ground in order to get our money. For a short while, things were better for women and for average Afghan citizens. When we withdraw, the rollback to their liberties will be immediate and drastic. We may have also destroyed Pakistan's ability to hold its own Muslim extremist factions in check as well.
Our stated goal of preventing Al Qaeda and the Taliban from attaining nuclear weapons has led to our pushing them directly across the border into a country that does have nuclear weapons and a history of animosity with a non-Muslim country that also possesses nuclear weapons. We may have just destabilized not just one country, but three countries when all is said and done.
Our Administration hasn't shown a great deal of innovation or competence in acknowledging or proposing strategies that will deal with this reality. My grade is a D-.
Foreign Policy elsewhere:
Who would have thought that the day would come when a sitting U.S. President would propose normalizing relations with Cuba, shake hands with the Venezuelan President who appears primed to take Castro's position of preeminence in the region, and manage to act civilly in Muslim countries without being rebuffed out of hand? Certainly not anyone who watched the way in which George W. Bush's Presidency dealt with the same challenges.
Our President gets high marks for treating other world leaders like mammals even when their policies and attitudes are overtly hostile to our own position. He has a sense of humility that is refreshing, for he acknowledges that the leaders of other sovereign nations have the right to disagree with us. He also doesn't begin rattling sabers at the first sign of provocative language.
He comprehends that strength is demonstrated just as aptly by restraint as it is by deployment. America's power is self-evident, even if our economic reality suggests we are on the wane. The reality is that no other nation possesses the ability to challenge our hegemony. China's air force and navy would be destroyed in under a day in a direct military engagement, and Russia's military capacity is overwhelming only in Georgia. America alone possesses the ability to singlehandedly wage war abroad without alliances. We're the only country with the ability to project true power globally, and the rest of the world knows it. It's why they bluster so much but do so little of consequence to provoke our ire.
The graceful administration of military supremacy is something that has been sorely lacking for nearly two decades. President Obama does seem to desire consensus in global diplomatic affairs, and he demonstrates a refreshing willingness to acknowledge the prerogatives of other nations as though they possess some equality with us, even though by virtue of measurable metrics such as economy and military capability they clearly do not. If nothing else, he seems to comprehend that it is important to avoid currying resentment and that is gracious and magnanimous to preserve the pride of other nations in your dealings with them.
I would give his foreign policy overtures and acts aside from Iraq and Afghanistan a B+. It would be an A, but I have yet to see him or his team address the very real problem of North Korea with any real innovation. If we can talk to Iran directly, why can't we deal with North Korea directly?
Health Care
I would say that while the budget contains a down payment on universal healthcare, it does little to spell out exactly what that healthcare will consist of and how it will be implemented. As such, it's hard to grade what Obama is doing on healthcare in his first hundred days.
However, in his extension of stimulus funds to states to enable them to keep their Medicaid alive and in his handling of Medicare, he gets high marks for addressing two problems with the immediacy that they deserved. States were running out of money for Medicaid, and his team managed to head off the problem before it became critical.
I give him a A.
The Budget
I thought that George W. Bush was the high water mark in fiscal profligacy. I was sorely disappointed to see what I saw in the first 100 days of the Obama Administration. While the end deficit was $1.75 trillion, the initial proposed deficit was closer to $3 trillion. This is outrageous, especially given the ways in which real spending cuts could have been made.
We could have cut our warhead count from over 5,700 to 300 and drastically curbed the cost of maintaining our nuclear arsenal. To boot, we would have done a great deal to discourage proliferation, and we would have made it safe and even fashionable for Russia to dispose of its own warheads. No single target set would survive a strike from 100 warheads, so we would have still maintained the ability to defend ourselves in a nuclear war as well. We could have halved our defense spending from $700 billion to $350 billion and withdrawn from Iraq and Afghanistan.
We could have slashed the $30 billion in farm subsidies that supposedly benefits the family farm but instead goes to food processing giants like Monsanto, Cargill, and Archer Daniels Midland.
We could have put it the way that it is when dealing with Social Security: those individuals who have $100,000 annually in retirement income don't need Social Security payments. To the extent that they pay more than they receive, guess what? They received plenty in government spending on private enterprise products like weapons systems and prescription drugs, because they own the stocks that benefit from such outlays.
We could have asked the hard questions about why it is that even though we spend $1.6 trillion on healthcare, and Cuba spends about $3 billion, we rank behind Cuba on key indicators of health. Perhaps we aren't getting the dividends on our investment that we want and it's time to refocus our spending a bit. Consider that even those industrialized countries who spend less than a fifth of what we do to insure all of their citizens have better health metrics than us, and ask yourself why it is that we tolerate a healthcare regime that requires us to finance the research and development costs of the world's drugs so that other socialized nations can cap the price that they'll pay while you and I pay a vastly higher sum for the same drugs?
We didn't do any of this. I give the Obama Administration an F on the budget, because it pushed through a budget without a meaningful debate, but given the sophomoric nature of the Republicans, I can't blame them entirely for doing so.
The Environment
The Obama Administration wants cap and trade for pollution. What this means is that companies will purchase the right to pollute from other companies who haven't used all of their government issued credits. This is absurd. A cap and trade market is vastly complicated, and will likely be prone to price manipulation by traders in its initial stages. A likely scenario is as follow: traders buy up credits and sit on them to drive the price of the credits up, and then unload their credits at a premium to desperate industries.
The consumer pays higher prices to make up for the expense, and the traders ride off into the sunset with their bounty intact. Pollution isn't reduced so much as it is shifted.
Let's be realistic: we need carbon reduction, not management. We need viable alternative energy solutions to wean ourselves off of foreign oil, and we need an infrastructure to support the deployment and supply of those alternative energy sources. A cap and trade market on carbon credits will provide an incentive for private industry (namely traders and brokerages who can profit from the trading of those credits) to delay the introduction of alternative energy indefinitely so that they can reap huge profits.
The government that issues those credits isn't immune from influence. I predict that if cap and trade becomes a reality, the first crisis will involve a trade manipulation as outlined above where traders jack the price up. The second crisis will involve a lobbied government and environmental oversight agency issuing ever greater numbers of credits to industry. Pollution won't be reduced. It'll be raised at the behest of industry every time industry sees fit to mount a lobbying blitz on Capitol Hill.
I give the Obama Administration a combination grade on the environment: a C+ for its attempts in the stimulus to construct an infrastructure to deliver alternative energy to American homes, and an F for its advocacy of cap and trade. That's an average of a D.
Summation:
Overall, I give this Administration a C. It's overall performance has been sketchy, but through the sheer calm demonstrated by Obama in these trying times, we the people have confidence. When our leader is a man who demonstrates confidence in the face of adversity, we demonstrate confidence. The man has ice water in his veins, and I have no doubt that the current crisis would have been far worse had someone of, say, John McCain's temperament been elected in November.
It is the A+ that Obama earns for his intangible leadership qualities that brings his 100 day grade up to a C. He is cool, calm, collected, and confident. Whether or not that cool calm collected demeanor is justified remains to be seen. However, his leadership has America calm. And that is what is sorely needed in these times.