And the Beat(ing) Goes on Part 22: More Failure from Obama and This Congress

Obama and the Congress recently threw together a so called "debt deal" to hopefully stop the lowing of the credit rating of the US.  IT FAILED since S&P lowered the rating from AAA to AA+ much to the chagrin of the White House who immediately claimed that the S&P's numbers were flawed. But then when has this administration ever taken the blame for anything.  This administration immediately called for MORE SPENDING and MORE TAXES, just exactly what the S&P said got the US to the situation it is in today.  Unfortunately those who ignore history are doomed to repeat it.  The Cap Cut and Balance Bill that was before the Senate and which Harry Reid said was DOA would have curtailed the reduction in the credit rating but of course the Dems blame the Right for the problem and say that it is all because of the tax cuts under Bush, you know , the same ones that Obama has continued, not once but twice in his two years in office.
The situation worsened after the phony Debt Limit Bill was passed because everyone in the world other than the Leftist of this administration saw it for what it was (is). It does nothing to reduce debt or deficit as the S&P committee has pointed out.

US unemployment is now 9.1 per cent, down from 9.2 in June. One might point out that part of the decrease could be due to the "Back to School" hiring that occurs seasonally. Previous years employment number will give credence to that speculation.  With numbers of long-term unemployed multiplying,(even a few on the Left are saying that the real number of unemployed is actually 18% and I call that number conservative) those on the left and a few writers of The New York Times(as well as a few Dem Congressmen) say that public works projects and direct employment programs are the fastest way of getting the long-term unemployed back into jobs. Many are calling for a new  STUMBULUS Deal to mirror the FAILED first STUMBULUS Deal

But is this really the answer? Or might tax relief in fact do better? Obama himself gave a half-hearted support for a "tax relief" plan for those who hire returning Veterans. Of course this was more campaign rhetoric than much of anything else if one gave note to the audience in attendance to this speech. I noted a lot of Veteran Organization Hats, a few military uniforms and some young people who may or may not have been veterans. On the other hand, there are many who argue that uncertainty for business around taxation and regulation with the Obama administration has forced investment to wait and see and this seems to be the widely accepted opinion of those on Wall Street, small business folks and investors world wide. In these times of failed government stimulus and crys for MORE,  there's still uncertainty that things have not bottomed, leaving investors waiting.

In December of 2010 I posted these comments from the Australian which are just as pertinent today as they were then and worth repeating. Bloomberg columnist and widely read analyst Amity Shlaes published The Forgotten Man: A New History of the Great Depression in 2007, risking derision for taking on America's economic sacred cow, Shlaes has argued the New Deal was a tragic mistake in social engineering. (Today I compare it to Obama and the Lefts social engineering)

She argued that presidents Herbert Hoover and Franklin D. Roosevelt should have allowed the market to recover rather than spend billions on government schemes.  I and others have also argued that both Bush with his original TARP and Obama with his continuation of the same  and the STUMBULUS fiasco should have done the same. In the following paragraphs one could very well exchange OBAMA for FDR and the message would be the same so keep that in mind as you read.

FDR's New Deal was the prime offender. Throughout the 1930s, the US stayed deep in economic depression. By 1937 it had developed a depression within a depression.

The New Deal is foreign territory to most Australians. Its experimentation, largesse of government spending, indifference to global partners or agreements and the, at times, autocratic stance by the president in decisions about finance is unimaginable in any successful Australian leader.

For Roosevelt, there seemed few limits. Such was the power and financial might of the US, allies such as France and Britain bent before him
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But prices continued to stagnate. Shlaes writes that what FDR was doing was like "pouring glasses of water into the ocean in the hope of raising the sea level". Buyers also determine prices. Even as the US government was offering low interest loans to farmers at the rate of $US1m a day, it was also paying farmers not to farm.(One could compare this to Obama's failed plan for housing rather than farmers) As gold hit a new high, Roosevelt put the US back on the gold standard.(So  far Obama has not considered this even though gold is at an all time high. The Leftist believe for the most part that gold is evil since it limits their spending habits to what is on hand and can not be printed as can paper money.)
The depression remained, with unemployment at 23 per cent.

Roosevelt began massive projects under the Tennessee Valley Authority, constructing dams for hydro-electricity. Power to the people, literally, in a nation where private companies owned the utilities. Farmers and locals were resettled at great cost and much protest, and private utilities companies pursued until they could be bought up by the federal government. (Of course Obama's "Shovel Ready Jobs" , which was to be the great answer to FDR's plan was a failure so rather than a TVA we now have a government controlled Auto industry, seized by Obama and subsidized by the taxpayer, We might also add the Banking industry to that seizure as well)

The New Deal in the US during the 30s was America's flirtation with a command economy. It failed, and was saved only by the industrial expansion of war in the early 40s.(So far Obama's failed STUMBULUS plan has had no such savior)
What became known as Keynesian economics is seen as the theory behind the New Deal. However, as the US unemployment figures remained stuck in the teens by 1937, Keynes wrote to Roosevelt saying he should abandon his war against private utilities companies: "It is a mistake to think businessmen are more immoral than politicians." (Obama and the LEFT could also take a lesson from Mr. Keynes since they believe that business leaders, business and anything not controld by the government is evil)

The New Deal forced income taxes on high earners to 79 per cent, introduced death duties and lowered tax-rate thresholds. It even delivered an undistributed profit tax as capital retreated in the face of unfair competition from government monopolies and over-regulated markets. ( Does this not sound just exactly what the Left and Obama wish to do and are doing via regulations not passed by Congress but by proxy via such agencies as the EPA?)

By 1937, taxing the "middleman" had become an FDR sport while new laws to tighten rules around monetary policy forced banks to keep more cash and cut back on loans. Business became expensive. Wages were forced up - in the first six months of 1936 by 11 per cent. August 1937 witnessed the greatest drop in industrial production ever recorded. (How similar to what is happening under the OBAMA NO PLAN other than tax the rich and regulate everything. Wages are now higher than they have been in history contratry to what the LEFT wouold have you believe. The AVERAGE HOURLY wage now stands at over $23.00 an hour and industrial output  is at it's slowest in years.  I heard recently Obama blame the decline and failure of industry to grow on the earthquakes in Japan but of course he never has admitted that 9-11 had any effect on the economy under Bush. It still remains all Bush's fault.

In the meantime Obama continues to have no plan, the Left in Congress has no plan other than blame the "tea party" and call for more spending and more taxes.  Perhaps each of those in Congress ,the White House and the Leftist who continue to drink the koolaide shold read this article as well as the conclusion which follows.)

In stark contrast, Australia and Britain took a very different path. The British government continued debt reduction. Keynes's biographer Robert Skidelsky, in Interests and Obsessions, writes: "What is striking in retrospect is the shallowness of the British depression and the need for recovery from it in the absence of any deliberate fiscal stimulus. British unemployment, 2.9 million at its peak in 1932, was half Germany's and a sixth of America's at the same date."


In Australia, more damaged by heavy debt by the mid-20s, the story was also far better than in the US. By the time the Scullin government fell in 1931, opposition leader Joe Lyons had mounted a rallying cry that only he and the United Australia Party could be trusted to deliver "sound money". In government from 1932, Lyons fought the depression with modest relief works and government economies to bring budgets back into the black.
From 1934, figures showed that Australia had turned the depression around.

Unemployment had gone from 29 per cent in 1931 to 16 per cent by 1935.
Australians' belief in labour market flexibility and sound money should never be ignored and their distrust of utopias and social engineering has a lot going for it.

May I be so bold as to call your attention to the last sentence and even repeat it for those who perhaps fail to read well or do not tend to "go back" to read anything of importance. I will take license and change a few words in the closing sentence:
'AMERICANS belief in labor market flexibility and sound money should never be ignored and their distrust of utopias and social engineering has a lot going for it.