Why I oppose Obama's economic policies
I am very concerned that the President's policies are going to lead this country into more serious economic problems than we have today. This is not to say that all aspects of the Obama Administration's policies are wrong. However, the fundamental premise of these policies is wrong. I have not heard anyone in the Obama Administration admit the difficult truth that the economy is changing nor does it seem that the goals they are pursuing reflect that. If the economy does not recover along the lines they project, then the massive expenditures being made will come home to roost in the former of significant inflation.
The Obama Administration has called for spending massive amounts of money over the next few years. These amounts will raise the national debt to staggering new levels. Some of the things they are spending on are good ideas -- green technology, improving the environment, more mass transit, supporting Amtrak. All of these are good ideas. However these are merely small components of the overall package.
Much larger amounts are being spent on highway building, promoting the purchasing of new cars, or one time subsidies to state and local governments to help with their budget shortfalls this year. These larger subsidies are promoting an economy that does not exist any more. Sure there will continue to be construction and auto sales - but these will not exist at the rate they used to. And when the economy does not pick up this year, who is going to make up the shortfalls in state and local tax revenues next year, when demands for public support like welfare, Medicaid, food stamps, and unemployment will be higher?
The economy that collapsed in 2008 was an economy that fed off of easy credit. People with bad credit and no money could buy houses or cars. People could borrow home equity loans in order to live beyond their means because their home values continued to go up and up. Does anyone think that we will (or should) return to credit policies like that? But without that kind of credit fueling spending habits, how can the economy return to the levels it was at before?
I have not heard anyone in the Obama Administration admit the simple fact that economy will not return to the levels it was at before because the days of free and easy credit are over. For example, the Obama Administration has endorsed tax credits for buying new cars and providing money so that federal, state, and local agencies can buy new cars. And they are spending money to build new roads and bridges to support expanded car driving habits.
I have not heard anyone in the Obama Administration admit that the home building industry is not going to come back to the levels it has been at, and that industry has been fundamental to our economy. The Obama Administration is trying to push banks to lend more money to home buyers - but the reality is that the pool of people buying homes is going to shrink and therefore the number of homes built and sold will be less too. The rate of unemployment is going to stay high because the old jobs supported by consumers getting free and easy credit are not coming back. Unemployed people cannot buy houses. Also, people with bad credit and no money down who were finding they could get some very creative mortgage products are not going to be allowed to borrow money any more.
It is ironic because everyone agrees that we are in the fix we are in now because consumers, encouraged by lenders, spent far more than they could afford. The Obama Administration's plan for getting us out of this mess is to do exactly the same thing -- spend more than we can afford and hope that its income - tax revenues - will increase. But what happens if, just like the consumer who over-extended and then found their income was reduced or eliminated, the Obama Administration finds the economy does not improve at the rate it expects and taxes don't increase to pay down the debt. What happens then?
I remember 1979, 1980, 1981, and 1982 when both the rate of inflation and interest rates were around 20%. I am opposed to the economic policies of the Obama Administration because I fear they will return us to those days before his first term in office expires.
The Obama Administration has called for spending massive amounts of money over the next few years. These amounts will raise the national debt to staggering new levels. Some of the things they are spending on are good ideas -- green technology, improving the environment, more mass transit, supporting Amtrak. All of these are good ideas. However these are merely small components of the overall package.
Much larger amounts are being spent on highway building, promoting the purchasing of new cars, or one time subsidies to state and local governments to help with their budget shortfalls this year. These larger subsidies are promoting an economy that does not exist any more. Sure there will continue to be construction and auto sales - but these will not exist at the rate they used to. And when the economy does not pick up this year, who is going to make up the shortfalls in state and local tax revenues next year, when demands for public support like welfare, Medicaid, food stamps, and unemployment will be higher?
The economy that collapsed in 2008 was an economy that fed off of easy credit. People with bad credit and no money could buy houses or cars. People could borrow home equity loans in order to live beyond their means because their home values continued to go up and up. Does anyone think that we will (or should) return to credit policies like that? But without that kind of credit fueling spending habits, how can the economy return to the levels it was at before?
I have not heard anyone in the Obama Administration admit the simple fact that economy will not return to the levels it was at before because the days of free and easy credit are over. For example, the Obama Administration has endorsed tax credits for buying new cars and providing money so that federal, state, and local agencies can buy new cars. And they are spending money to build new roads and bridges to support expanded car driving habits.
I have not heard anyone in the Obama Administration admit that the home building industry is not going to come back to the levels it has been at, and that industry has been fundamental to our economy. The Obama Administration is trying to push banks to lend more money to home buyers - but the reality is that the pool of people buying homes is going to shrink and therefore the number of homes built and sold will be less too. The rate of unemployment is going to stay high because the old jobs supported by consumers getting free and easy credit are not coming back. Unemployed people cannot buy houses. Also, people with bad credit and no money down who were finding they could get some very creative mortgage products are not going to be allowed to borrow money any more.
It is ironic because everyone agrees that we are in the fix we are in now because consumers, encouraged by lenders, spent far more than they could afford. The Obama Administration's plan for getting us out of this mess is to do exactly the same thing -- spend more than we can afford and hope that its income - tax revenues - will increase. But what happens if, just like the consumer who over-extended and then found their income was reduced or eliminated, the Obama Administration finds the economy does not improve at the rate it expects and taxes don't increase to pay down the debt. What happens then?
I remember 1979, 1980, 1981, and 1982 when both the rate of inflation and interest rates were around 20%. I am opposed to the economic policies of the Obama Administration because I fear they will return us to those days before his first term in office expires.
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