Barack's Economic Fix

by John M. Curtis
(310) 204-8700

Copyright February 17, 2009
All Rights Reserved.                    

       Signing his hard-fought $787 billion stimulus bill into law in Denver, President Barack Obama delivered on a key campaign promise to help fix the nation’s battered economy.  He tried to bring Republicans into the fold but in the end they were more committed to sour grapes than practical solutions for a broken economy.  Only three GOP senators and no House members supported Barack’s Economic Recovery and Investment Act, designed to help the economy climb out of deep hole.  Barack made it clear that signing the bill was not economic recovery, only a beginning of a slow process of renewing confidence.  Signing the bill outside the beltway in a Western swing state showed good political instincts.  Typically a reliable red state, Colorado went blue on Nov. 4, signaling a subtle demographic shift.  Obama rewarded the Rocky Mountain state for turning a new page.

            In the land of conservative, anti-illegal immigration advocate Rep. Tom Tancredo, Obama laid out his rescue plan designed to spur growth in alternative energy technologies, bailout cash-strapped states and cities, fund scientific and technological research and reform an obsolete health care system, Barack tried to reassure a nervous nation, watching the Dow Jones Industrial Average plunge 297 points to 7550, a nearly 10-year low.  Republicans opposed to Barack’s plan cite its lack of business tax cuts, reverting to Supply Side Economics.  Bush’s tax cuts did little to stimulate growth or offset the current economic meltdown.  Barack’s sweeping reinvestment plan allows the government to fund massive infrastructure projects, to offset 3.6 million recent jobs losses.  Allowing states and local government to layoff millions of workers would only worsen the economic mess.

            Barack’s economic package comes on the heels of a White House-Pentagon plan to escalate the Afghan War.  Already adding 3,000 troops, Obama expects to add as many as 30,000 more, while he begins an orderly draw-down of Iraq forces.  Economic recovery, whether admitted to or not, was always contingent upon ending the Iraq War.  Columbia University Nobel laureate economist Joseph Stiglitz warned of the Iraq War’s toll on the economy.  Just as the U.S. realizes some desperate savings from Iraq, it’s possible for Afghanistan to cannibalize the progress.  Escalating the Afghan War would threaten all the efforts to stabilize a shaky U.S. economy.  Economic recovery requires more controls over runaway defense spending, something to which the GOP raises few objections.  Wasteful and unneeded defense spending is the surest way to sabotage Barack’s recovery plan.

            Obama travels tomorrow to Phoenix where he plans to speak on the housing crisis.  With some of the highest foreclosure rates in the nation, Barack plans to lay out his plan to stop the real estate meltdown.  Most facets of economic health seem tied to recovery in the housing market.   Slowing the foreclosure crisis should eventually enable homeowners to reclaim some of the lost equity that continues to rob consumer spending.  Helping homeowners together with Treasury Secretary Tim Geithner’s new plan to fix banks’ liquidity crisis should help offset current job losses.  Attacking both housing and jobs, Barack hopes to get the economy moving again.  He also hopes to help reverse losses on Wall Street, an essential source of capital to many medium and large-size businesses.  Fixing the stock and real estate markets will go a long way in jolting consumer spending.

            Republicans, like Barack’s former rival Sen. John McCain (R-Ariz.), opposing the economic recovery plan, risk alienating constituents desperately in need of federal government help.  Barack told a Denver audience that without federal help thousands, if not millions, of state workers would lose their jobs.  Whining about what’s included or excluded from the current stimulus bill does little to reassure distressed taxpayers that help is on the way.  Opposing the bill appears politically correct for Republicans faced with reelection in 2010 but carries risks of encouraging fence-sitting voters to shift allegiance to Democrats.  Just when the GOP didn’t think things could get worse, they’ll find themselves behind the eight-ball in the next election.  Whether Barack’s stimulus plan improves the economy or not, at least he’s actively trying to make a dent in a bad situation

            Barack’s economic stimulus plan raises high hopes and expectations for eventual economic recovery.  He’s tried to temper unrealistic expectations while, at the same time, maintaining proper optimism.  Barack has been accused of talking down the economy, warning about dire consequences should his plan fail. While there’s some objectionable spending, the vast majority of funds go to worthy projects attempting to offset current jobs’ losses.  GOP lawmakers can’t have it both ways:  Saying they want economic recovery but offering no solutions other than tax cuts.  Barack’s signing ceremony and speech put Republicans back on the defensive, showing a clear and practical voce to fix the nation’s economic woes.  GOP offers some hot air but very little else.  Barack’s first heroic act involved putting the nation’s economic house in order.  How it turns out is anyone’s guess.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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