Obama Standing at a Fork in the Road: Will He Choose Wisely?

The New York Times reports that President-elect Obama has brewed up a plan to reverse the downward plunge of the U.S. economy. Public works, on a scale not seen since the construction of the highway system under Dwight Eisenhower, will form the regenerative backbone of recovery. Hundreds of thousands of newly employed citizens will try to outdo each other in the race to replace the dreaded tungsten filament across the nation. Broadband internet access will cover the U.S. like an angel's wings as every child (yes none left behind), will experience an education in a newly refurbished, modern building that will be the envy of the current student population. Public buildings will have their heating systems redesigned for energy efficiency. Hospitals will become the new DARPA with high speed internet connections to share data and avoid duplication and resource wastage.

This actually sounds like a good plan. By attacking the traditional energy "devil may care" attitude, the nation would become less dependent on foreign oil as it would by developing new "green" cars. A well-educated, employed population working in an efficient manufacturing infrastructure would increase production and boost exports. But, the question needs to be asked. Where is he going to get the money?

If the U.S. already owes $63,600,000,000,000 in debt, ($10,600,000,000,000 in National debt and $53,000,000,000,000 in pledges to social security and other programs) that it has no way of ever paying off, where is it going to get another few trillion to basically employ itself into economic prosperity? The latter, for it to become reality, needs the trust of foreigners to finance yet more profligate spending with no hope of ever receiving the check in the mail. China' s patience is wearing thin and absolute panic is starting to set in, as witnessed by Jiwei Lou, the chairman of China's largest sovereign wealth fund saying he "does not have the courage" to plow money into Wall Street financials.

The latter statement leads on to the logical sequitur that if the U.S. financial sector is two thirds the way out of the window, the U.S. government's financial creditworthiness can't be far behind. Foreign Central Banks have dumped $120 billion in U.S. agency debt in the last 5 months, 10 year Treasury bonds are yielding 2.73%, 3 month bonds at .01%. Who's interested in rates like these when, even in the current deflationary phase, we are looking at 2.7% inflation that will inevitably rise as greenbacks, backed by zip, nada, flood the country like manna from heaven.

To pay off the national debt along with all the unfunded social security funds, each American household would have to pony up in the region of $500,000. Does Mr. Obama realize this or not? Surely his "economic advisers" would have given him the bad news already? If he had to be told this in the first place, then there would be real reasons to worry about his leadership skills. It would seem that the only plans coming out of Washington these days, regardless of old or new administration, are formulated to address only one thing: keeping the voters thinking that there is a solution that only demands a little pain and continually throwing the same voters' money at the problem will fix it.

The recipients amongst the banking and auto community know it for what it really is; free handouts from the poor and middle class to the rich. The truth of the matter is that, in order to rebuild the house, the existing monstrosity needs to be demolished and new foundations laid, this time not just of sand.

Now is the time that the U.S. must start SAVING money instead of spending even more of what it does not have. By sending another 20,000 troops to an already destroyed Afghanistan to pound it even more, maintain the troop presence in Iraq and continue to head towards a confrontation with Iran, Russia, China and Pakistan, Mr. Obama will be wasting hundreds of billions of dollars that could be better spent at home on the people who really need it. Refusing to take this particular fork in the road would be one way of funding his economic recovery along with abolishing the tax cuts for the rich (which he promised to do and is now extending them to 2012), closing foreign military bases across the world, bring the troops back home, stop spending billions in blackbag operations trying to subvert democracy across the world and bankrolling tin pot dictators from Haiti to Pakistan.

Mr. Obama has arrived at the fork in the road and needs to choose wisely. He is staring at a chance, probably the last, to save his country. One path leads to rebuilding her using a realistic economic plan and forming pragmatic geopolitical relationships around the globe. The other continues the course that has been set for him which will bring America to its knees as inevitably as Rome was brought to hers.

Comments

[Socialism c...:]

All those "good things" you describe in the first paragraph...those are the fruits of prosperity. How do we continue thinking that we can "have things" without first having "earned" them by producing other goods at a profit? I.e. government paying for "fruits" is a shell game, furthering debt, not stimulating anything! It will merely postpone and intensify the future bottoming. Have we not learned anything...about not spending what we don't have??? How is that not what this is?

Let's fix the real economy, and improve our common lot off the proceeds thereof!!

Step 1: Balanced Budget Amendment
Step 2: Restore personal property rights -- abolish income & property taxes!! (fairtax.org)

2008 Dec 09 01:35 PM

[Tom B:]

Obama has already made pulling out of Iraq a priority, so that maney-down-a-rat-hole should cease, perhaps within a few quarters.

2008 Dec 10 08:33 AM

[Tom B:]

The public good is not a priority of the private space. GM didn't build the highway system; they convinced Uncle Sam to do it (with some positive AND negative consequences). ATT, Comcast, etc didn't build out the internet (in fact, they are doing their level best to screw it up); Uncle Sam did. And we need bridges and tunnels that don't collapse. We need-as even conservative T. Boone Pickens understands-- a way to ship fewer energy $ to bad dictatorships, like Saudi Arabia; and we need to deal with climate and peak oil. This means wind, wave, and sun, and maybe some nuclear. But the Gov't needs to set the prioroties, because utilities inevitably go with whatever saves them a few cents a kilowatt.

2008 Dec 10 08:41 AM

[xmplary:]

The good news is that 8 years of this kind of stupid decisions are fast coming to an end. Obama shows promise of leadership that we so desperately need. Lets give him the same benefit of the doubt that we have given to our thankfully soon to be ex-president.

2008 Dec 10 12:46 PM

[xmplary:]

This is the link I mentioned... apparently the anchor tags arent allowed in the comments. failblog.org/2008/12/0.../

2008 Dec 10 12:48 PM

[jack kreg:]

the USA has an agreement to leave Iraq, Iraqi's now have some form of freedom to build their own country, defend themselves and live productive lives without fear of Sadaam murdering hench men.
So war costs may be peaking, perhaps lower in 2010.
Question is do we use high gov spending or middle class tax cuts to stimulate economic growth.
My vote is for middle class tax cuts, cut them in half. What are middle class workers going to do with more of their own money?
Pay mortgages/rent, pay down debt, save for retirement or college, help out a friend in need or neighbor/relative, buy food or gas, donate to church or charity Sal Army or VFW.
I'm for letting middle class workers make these decisions, not Nancy Pelosi or Harry Reid!!
Tax cuts for middle class workers, cap gov spending at 08 levels, economic growth will provide increased tax revenues and we will get a balanced budget if we cap gov spending at 2008 levels.

2008 Dec 10 03:16 PM

[Robert Nabloid:]

So, Obama's plans are to build infrastructure... How does that help non-tradesmen? There are a lot of white collar workers out of jobs.

Another question: If consumer spending is 70% of GDP, how big would his (Obama's) spending programs have to be to replace a large chunk of the consumer spending which has evaporated? Would we need to double government's size (in budget terms)?? I guess that depends on how much the consumer spending contracts... but it would be massive.

An even better question: How is this sustainable?

The best question: Why should we try and stop the slowdown that is needed for the economy to start rebuilding in a healthy and sustainable fashion? We were building little or nothing of value and buying junk from around the world - things we didn't NEED. And we were doing it with dollars we had yet to earn. As the baby boomers get older they will be less willing to take on further debt, realizing that they are coming to the age of retirement and don't have a working future to borrow against.

2008 Dec 10 06:38 PM

[Tony Petroski:]

Oooh. The Chinese are upset with us. We can't survive with our future of Freedom. They can't survive without their future of Communism. I like our chances better.

2008 Dec 10 11:52 PM

[CLH:]

Wakeup---Yes you wake up the gov has no right to determine our hours or our compensation. Thats called Nazism.

2008 Dec 11 06:51 PM