Obama: Leading America Into Depression

NOTE: Tomorrow (Tuesday) I'll switch gears for a day and write "In Praise of Rush Limbaugh." speaking about his Saturday remarks at CPAC (and the fall-out). Then, I'll go back to explaining why Obama's horrible economic and social policies are driving the nation into a Depression

In dealing with the current severe recession, Barack Obama is making "all the wrong moves." He is taking steps that will turn today's recession into tomorrow's Depression. At a certain point, he will not be able to blame his mistakes on George W. Bush. I'll be writing all this week (on this blog and my other one) about what has gone wrong with our economy -- and why Obama's spending spree won't cure what ails us.

On Monday and Tuesday, this column and my other one will be roughly the same. Starting on Wednesday, this column will differ from the other. I hope you'll continue to visit both.

Amity Shlaes' book about the Depression (The Forgotten Man: A New History of the Great Depression) talks a great deal about the real strengths -- and the real weaknesses -- of Presidents Herbert Hoover and Franklin Delano Roosevelt.

The big question she faces is: Why on earth did the Depression last so long (from 1929-1940)? The answer is that, first Hoover, and then Roosevelt, pursued policies that made a sustained recovery impossible. Roosevelt cultivated groups, such as consumers, who had many votes and scapegoated producers, who had few votes. He looked at voters not as individuals but rather as members of groups, a Democratic tendency that continues to the present day.

Regarding Franklin Roosevelt, Shlaes reminds us that very rich man gained his wealth from inheritance. He was not in any sense a self-made man. Frankly, he knew less about business than most people who put in a stint at 7/11 or Burger King. Hoover wasn't much better, believing that a balanced budget would cure all economic woes.

Why is what Amity Shlaes says important? BECAUSE OBAMA IS MAKING THE SAME MISTAKES THAT PROLONGED THE DEPRESSION. Shlaes says:

". . . The biggest problem was the intervention, the lack of faith in the marketplace. Government management of the late 1920s and 1930s hurt the economy. Both Hoover and Roosevelt misstepped in a number of ways.

"Hoover ordered wages up when they wanted to go down [because of deflation, which is what we have now]. He allowed a disastrous tariff, Smoot-Hawley [think: "buy American"], to become law when he should have had the sense to block it. He raised taxes when neither citizens individually nor the economy as a whole could afford the change. After 1932, [many nations, including Japan, Sweden, Greece, Denmark, and others] began seeing industrial production levels rise again -- but not the United States.

"Roosevelt's errors . . . were equally devastating. He created regulatory, aid, and relief agencies based on the premise that recovery could only be achieved through large, military-style efforts . . . [Some] new institutions, such as the National Recovery Administration [NRA], did damage. The NRA . . . [over-relied on] price-setting. NRA rules were so stringent they perversely hurt business. They frightened away capital, and they discouraged business from hiring workers. Another problem was that the laws . . . were so broad that no one knew how they would be interpreted. The resulting hesitation in itself arrested growth.

"Where the private sector could help to bring the economy back -- in the area of [electric] utilities, for example -- Roosevelt and his New Dealers often suppressed it . . . . [As a result of Roosevelt's intimidation tactics] business decided to wait Roosevelt out, hold onto their cash, and invest it in future years. Yet Roosevelt retaliated by introducing a tax -- the undistributed profits tax -- to press the money out of them.

"Such forays prevented recovery and took the country into the depression within the Depression of 1937 and 1938 . . . . The high [union] wages [for some] made possible by New Deal legislation helped those workers who earned them. But the inflexibility of those wages also prevented companies from hiring additional workers. Hence the persistent shortage of jobs in the latter part of the 1930s . . . . Fear froze the economy, but that uncertainty itself might have a cost was something the young experimenters [of the New Deal] simply did not consider.

"Roosevelt's move[s overall were] so profound that they changed the English language. Before the 1930s, the world 'liberal' stood for the individual; afterward, the phrase increasingly stood for groups."

Tomorrow on my blogs, I'll talk about how Obama has turned out to be someone who doesn't know or understand economic history and thus seems hell-bent on repeating it. Like Hoover and FDR, he doesn't understand business -- how could he? -- and so he's advancing policies, especially in taxes, that make it impossible for private enterprise, especially small businesses, to create a sufficient number of jobs. That's not his intention, of course, but neither was it the intention of Hoover and Roosevelt.

How does Sarah Palin fit into this discussion? Unlike Obama, she doesn't believe government is the solution to all our problems. She recognizes that while government might create jobs on a temporary basis, the creation of wealth -- and of economic growth -- depends on the private sector. She recognizes that if the producers fail, consumers cannot succeed. She understands that if supplies decline, prices invariably shoot up. Finally, she's aware that just printing money generates short term gains . . . and long-term pains. If Obama knows any of these things, he now acts as if he doesn't.

Sarah Like "Sully," Obama "Nellie"

Scroll down to read what we absolutely must do to start winning again in 2010 -- and to win big in the presidential year of 2012.

The motto of the woman pictured above is "Serve the people." To find out what Obama's motto could be, scroll down. Hint: It's less about serving than about scaring.

Most Americans remember a part of Franklin Roosevelt's Depression-era remarks about fear. Yes, he did say in his 1st Inaugural, "The only thing we have to fear is . . . fear itself," but that's not the whole statement. It went this way, "The only thing we have to fear is . . . fear itself . . . nameless, unreasoning fear." The final three words, starting with "nameless," are extremely important.

Granted, there are situations in which fear is appropriate -- for example, if you wake up and see a hungry grizzly bear climbing through your bedroom window. In a case like that, there's nothing unreasonable about fear. (After the initial surge of terror, of course, the most important thing you can do is to calm down and decide -- reason -- quickly about how you're going to get out of the situation. In other words, act like Captain "Sully," not like Nervous Nellie.

Barack Obama has told us that, without his (potentially catastrophic) Stimulus Bill, we will face a financial "catastrophe." How he knows that -- the reasoning part -- remains unclear.

So, why did he appeal to one of our primal instincts? Because he knows -- or at least his speech guru Aexlrod knows -- that fear sells. Scare people half to death and many of them will do your bidding. The last thing Obama wants his audiences to do is have reasoned responses to his rhetoric.

When he tells us, for example, that "95% of the American people are going to get a tax cut," he is lying to us. He knows that nearly 50% of American wage earners (and their immediate dependents) don't pay federal income taxes.

When they get their $500 or $1000 "tax cut" from the Treasury -- and yes, Tim Geithner and Tom Daschle who didn't pay their taxes, will get one -- it will not be a tax refund. Instead, it will be a welfare check. In other words, Obama will be putting half the population on what our grandparents used to call the "dole," welfare. As Obama told Joe the Plumber, it's not about stimulus, but rather about "redistribution of wealth."

Why do such a damaging thing? Because Axelrod/Obama know that dependent people are reliable providers of votes in future elections. When the government basically "owns" someone, he or she expresses gratitude by voting for bigger and bigger government. Sadly, though, he or she is no longer a free, independent citizen.

Thus, we have FDR, along with all other great American leaders, arguing against reliance on "nameless, unreasoning fear." In contrast, we have Obama and his minions relying completely on fear because reason isn't on their side. As every tyrant knows, fear is his most powerful ally. Gov. Sarah Palin's motto is "Serve the people." In contrast, Obama's seems to be: "Scare the people."

In today's difficult times, we will still sing "God bless America." Yet the more appropriate phrase might be "God help America." In fact, God generally blesses our land most abundantly when the vast majority of Americans do everything in their power to help themselves, their families, and their communities.

WHAT WE MUST DO TO START WINNING AGAIN . . .

We've all heard the saying that "close only counts in horseshoes and hand grenades." In fact, close also counts in politics, where we need allies who are "close enough" in their views to vote with us against Obama-Biden types. We have been skunked badly in two straight elections, and rationalizations about those devastating losses aren't helpful. Clearly, we need to do a much better jub of explaining why our principles and policies are better for the American people -- at least for a MAJORITY of the American people.

Part of the process involves our talking, but a bigger part involves listening to why so many good people did not side with us. We need inspirational leaders, like Gov. Palin (and her Lt. Gov. Todd Parnell), Marsha Blackburn, Diana Irey, Linda Chavez, Tom Coburn, and, yes, like Michael Steele. Winning AL, MS, UT, ID, KY, and WY are not going to be enough. States like OH, FL, NC, VA, and even PA are winnable if we do a much better job of organizing and fundraising. The Left outraised us in donations by two-to-one and three-to-one. We have to do more than just express our opinions on the Net and the Rush Limbaugh Show, important as both those activities are. All of those who are serious about winning are going to have to put their money where their mouths are.

Specifically, we need many more young voters and more Hispanics, and it's up to US to figure out the best ways to get much more support from those groups. There are 26 million veterans in the U.S., and we need a plan/mechanism for contacting every one of them. Ultimately, all groups that stand for classic American values are going to have to work together, share information, and leverage one another's strengths.