George Bush started the stimulus plan with $168 Billion now 19 months later enter Obama's Stimulus ll for a hefty $814 Billion which was also supposed to make up for lost private demand. It to was a combination of the one-time tax rebates and spending mostly on social programs like Medicade rather than on "Shovel ready projects." Mr. Summer's promised this would have a 1.5 multiplier effect on GDP growth, and White house economistsChristina Romer and Jared Bernstein famously predicted the spending would keep the jobless rate below 8%.
All during this time the federal Reserve was also feeding the economy with unprecedented monetary stimulus,cutting it's benchmark interest rate to near zero and expanding it's balance sheet to more than $2 Trillion by purchasing mortgage backed securities and other assets.
During this time too, Congress passed other industry specific bills-cash for clunkers, the $8000 home buyers tax credit, mortgage payment relief, and jobless benefits up to 99 weeks. Yet all of this has merely stolen auto and home purchases from the future, with sales failing again, despite historically low interests rates.
Now U.S growth has decelerated to a mere 1.6 in the second quarter and a jobless rate of 9.6 after three consecutive months of job losses. In sum, never before has government has spent so much and intervened so directly in credit allocation to spur growth, yet the results have been mediocre at best. In return for adding nearly $3 trillion in federal debt in two years , we still have 14,9 million unemployed.
Democrats have embarked on the most sweeping expansion of government since the 1960's, imposing national health care, rewriting financial laws from top to bottom, attempting to re-regulate the telecom industry, and imposing vast new costs on energy, among many other proposals, not to stop there, in January it plans to impose a huge new tax increase on the "Wealthy."which in practice means on the most profitable small businesses.
Central to Mr. Obama's political strategy for passing these priorities has been trashing business and bankers as greedy profiteers. His administration has denounced or held up as political or legal targets the Chrysler bond holders, Wall Street bonuses, Goldman Sachs, health insurer profits, carbon energy investors and anyone else who has dared to oppose any of it's plans to "transform" U.S. society. At the Labor Day event in Milwaukee, Mr Obama was at it again, declaring that "anyone who thinks we can move this economy forward with a few doing well at the top, hoping that it will trickle down to working folks running faster and faster just to keep up-They just haven't studied our history. We didn't become the most prosperous country in the world by rewarding greed and recklessness."
Such rhetoric is not the way to restore business, it only spreads fear and even greater uncertainty.
As for blaming Republicans with only 41 senators they couldn't even block the $10 billion teachers union bailout. The only major Obama priorities that haven't passed are the cap and trade and the union card check. These were blocked by handful of Democrats who finally said "no mas." No administration since L.B J's in 1965 have passed so much of it's agenda in one congress- which is precisely the problem.
The Democrat's purposely used the recession as a political opening to re-distribute income, reverse the free market reforms of the Reagan era, and put government at the commanding heights of economic decision making.
Mr Obama and the Democratic Congress have succeeded in doing all of this despite the growing opposition of the American people who are now enduring the results. The only path back to robust growth and prosperity is to stop this agenda dead in it's tracks, and then by stages to reverse it. These are the economic stakes in November.
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