OBAMA TO ELKHART: My Pork-Laden Stimulus Bill Has No Pork!
February 9, 2009 32 Comments
Understand, this bill does not have a single earmark in it, which is unprecedented for a bill of this size. … There aren’t individual pork projects that members of Congress are putting into this bill…”
— Barack Obama, Elkhart, Indiana, February 9, 2009.…and I know that a new overpass downtown would make a big difference for businesses and families right here in Elkhart.”
— Barack Obama, Elkhart, Indiana, February 9, 2009.
ATLANTA— Hey- at least Barack Obama isn’t selling a bridge to nowhere! As the popularity of the stimulus package continues to plummet, Barack Obama, Campaigner-in-Chief, is back to doing what he does best: hitting the campaign trail. Pundits are suggesting this is evidence Mr. Obama is finding life at the top of the executive ladder more difficult than anticipated. Not surprising to this observer.
Barack Obama visited Elkhart, Indiana yesterday, which is suffering through the worst of the current economic recession. Unemployment in Elkhart has spiked to 15%. I have personally spent some time in Elkhart, visiting several manufacturing plants. The city is very much a sleepy, middle-America town. Down-to-earth, blue-collar, working class people. Very good people, in fact. I enjoyed my stay there: eating butter burgers and custard from Culver’s restaurant; taking the short trip to South Bend for a visit to Notre Dame and a nice dinner on the town.
But as I have seen first-hand, Elkhart has been suffering through this severe recession for a longer time than the rest of us. Elkhart is, after all, the RV capital of the world. And RV sales began plummeting over two years ago, when gas prices began to peak. Elkhart has had the double-whammy of high gas prices followed by a severe drop in consumer spending, both of which have killed demand for RV’s. It is a tsunami of prolific proportions for the city and it is admittedly difficult to watch, as I can place some faces with those unemployment numbers.
But it is also extremely frustrating to me as I watch Mr. Obama barnstorm across the midwest, eliciting incredible fear and uncertainty to sell his flawed stimulus package. People are increasingly coming to believe that the stimulus package is a mess, loaded with pork and waste. And further, where FDR lifted our spirits by telling us all we have to fear is fear itself and where Ronald Reagan told us we are as a city set on a hill, Mr. Obama, who is our most rhetorically gifted-president in a generation, is telling us if we don’t pass his bill, then we face catastrophe. I am coming away with an impression that Mr. Obama has tipped past thinking he is actually helping people and is now more concentrated on winning his first policy battle by selling this very flawed bill. I think it has gotten personal for Mr. Obama- and that is not good for Elkhart or for us.
The AP has rightly pointed out that Mr. Obama is having it both ways on pork projects. The bill is laden with pork- the only difference is that the bill was front-loaded with it rather than having had pork stuffed into it on the back-end through the earmark process. In any other economic time, money for the arts, the national mall, and other pet projects would be viewed as pork. Not today, evidently. Not when it is being spent by Democrats who promised an end to the old ways of Washington.
Mr. Obama really has a tough sell in my mind: much of his economic policies are equivalent to George Bush’s from the final days of his presidency- only amplified. Bush did a $180 billion stimulus? Mr. Obama says, I will make mine $800 billion. Bush did a $700 billion bank bailout? Mr. Obama says, I will make mine bigger and broader in scope (we await Tim Geithner to see Mr. Obama’s final numbers). It is tough to repackage failed policies and spend your political capital to sell them, I will admit. But I’m learning it must be a lot easier to do that than bring true change.
At any rate, Elkhart, Indiana is facing catastrophe- Mr. Obama’s words do apply to that town. Having some new road projects will put some of those people back to work, I will not deny that. But as Michael Steele, the new RNC Chairman, has been so aptly saying, those construction jobs are only for a time. We cannot build roads and railways forever. In the end, you have to spur private investment and build sustainable jobs. Long-term investment is more likely to be spurred through more favorable tax laws and broader availability of capital. On the contrary, Mr. Obama’s plan will suck capital out of the markets to the tune of $800 billion, while providing few tax economically positive tax incentives.
Towards that end, and considering Mr. Obama’s seeming disregard for the long-term economic consequences of his actions, I wonder what the people of Elkhart will do later, if the economy does turn and Mr. Obama’s interests change towards pursuing aggressive environmental regulations? Many of those would drive the final nails in the coffin of the RV market. The pride of Elkhart will be sacrificed at the altar of global warming mania. And these proud folks might be left with nothing but a shovel in hand.
My point here is that the choices of government have consequences in a real market. For every massive action taken by the government, there is some other economic project or possibility that has to be put down. And some market distortion invariably occurs. In the end, it was no surprise to me to learn that Mr. Obama’s stimulus package may help in the short-term, but may also drive down GDP growth in the long-term, per the Congressional Budget Office. I am increasingly afraid Mr. Obama’s narrow-sited plan will do little to help Elkhart, or any of us.
Is it really worth all of the waste and fear?
About Stephen VanNuys
I feel the stimulus package is in good hands with Timothy Geithner, Treasury Secretary and away from the former Secretary Paulson who basically ripped the American people off with his bad, unquestionable investments with our tax payer money.
http://ourcountryspresident.wordpress.com/2009/02/10/cheated-again-by-the-treasury-department/
Tom, how could you say that before they unvail the next treasury package. This is faith, which is an admirable virtue if it is the case.
Personally, I only have faith in two things first God and a distant second my wife’s love. If you want to place your faith in Obama then that is of course your choice I hope he saves you, but I’m building my hopes elsewhere.
Or are you getting the treasury package and the stimulus package confused?
Well put together article Stephen. I liked the writing style here this go around.
I must say, I think that the question of the stimulus package any more is more a question of whether the government should “do things or not”. It seems like we are at the point now that we are left to fear the results of the implosion of our “free market economy” (in quotes because that term must be used loosely with any REAL economy) through higher overall crime rates (read robbery, murder, murder-suicide of families) as people become unemployed. Unfortunately, I believe (and it can be readily seen through news reports) this is the very real result of people stretched to the end of their rope. Not sure that I want to give into a poorly devised stimulus plan just to avoid those fears. Some of the ideas are good, but I think we should expect our politicians to come back with more bang for our buck in this bill. I would like to know where it stands with all current revisions. Any ideas?
With all of the above said, I am reminded of the Joker from the Dark Knight as he spoke to Harvey Dent in the hospital, “I am just a dog chasing cars, if I caught one, I wouldn’t know what to do with it…”. My fear is that the American political leaders are the dogs, the stimulus plan is the car, and once we catch it, we won’t know what to do with it once it comes around.
Obama looks like he is stuck in the entry way in that photo BTW. Interesting….
BMM: He bumped his head. For real. That is the shot of him banging his head on air force one.
#1 – Tom, appreciate you dropping by. I guess I disagree. I did not like Paulson being meddlesome and I’m not a fan of Geithner either. The more I learn about Geithner, the more interventionist I realize he is. In fact, Mr. Geithner spent time in Japan during their similar real-estate fueled recession and he believes they did not do enough stimulus spending to get out of it. What is frightening about that perspective is that Japan spent $5-6 trillion over a span of about 5 – 7 years, building railways, roadways, bridges, and other junk all over that country. They are in debt up to their eyeballs and their country has never turned around. Stimulus is failed policy in my mind. I predict we will find the same to be true here in America.
My final thought is that it is extremely disappointing that our country has so quickly come to a place where so much economic power is being consolidated in Washington. It shouldn’t matter who the Treasury Secretary is or is not. It should only matter that you have determination and a strong work ethic- that is what should determine your personal economic success. Not who the next Treasury Secretary is. This whole story of bailouts and stimulus packages is about arbitrarily picking winners and losers. It has created even more uncertainty than ever before. Our economy used to be about analyzing who had the strongest balance sheets and operations. Now its about who is closest to power and who Washington favors most. With a Democrat in office, it will be minority owned businesses and labor unions. With the Republicans, it was the Wall Street types. Either way, it is bad policy. …my rant is over.
#3 – Good perspective BMM. The other thing I keep thinking is this stimulus is evidence that we as the American people have been handing too much alcohol to an aloholic. What I mean is that the government keeps adding more money on top of more money on top of more money to fight this. And there is not enough public outrage.
That stuff has to come from somewhere. Granted, the government is trying to design this such that we all get paid back someday (for example, taking equity stakes in banks- so the banks buy out the government’s share a few years down the road). But it’s a fools game, I fear. I think this will only have the effect of severely devaluing the US dollar. Which is true shame, for us and for the many countries who peg the value of their own currencies to the US dollar.
Best article I read in a while was one in the Washington Post a few weeks ago that was entitled something like remember when a Trillion was a big number? It went into how not even a year-and-a-half ago, George Bush was fighting Congress because they wanted to pass some SCHIP related legislation that would have cost $15-20 billion and Bush said that was too expensive. Now, every several weeks, some new government official stands in front of television cameras promising to throw another trillion dollars on top of this mess.
I stand by my previous comments that the government has too far entwined itself with this recession. If this thing lasts more than 2 more years, I blame the government. If they had all listened to Hayek they wouldn’t have done very much of this (I want to read some Hayek, btw, I’ve only gotten glimpses but what I’ve seen makes a whole lot of sense). Instead, they listened to Keynes- who’s theories were largely discredited in the 1960′s and 1970′s. It’s strange times indeed.
And it bothers me when Obama is quoted as saying the Federal government is our only hope now. What a sham! I very glad I did not vote for the guy.
And yes, that is Obama bumping his head.
#7 – “If this thing lasts more than 2 more years, I blame the government.”
Could you please be more specific that is way to broad a term. By specific I mean name names, administrations, etc.
“Best article I read in a while was one in the Washington Post a few weeks ago that was entitled something like remember when a Trillion was a big number?”
Yeah and then Bush more than doubled the National Debt to 11 trillion and magically turned a 200 billion dollar surplus into a 1.3 trillion dollar deficit!
Jorge,
Why do you think it is such a good thing that Bush doubled the deficit and grew the national debt? Personally, I feel that this spending is out of hand. Bush went to far and Obama is going even further. I don’t know how you can be so happy about the surplus being turned into a deficit or about Obama growing the deficit even more as we speak.
Do you live your life that way by just spending on credit cards? If so your in for a rude awakening.
Also, just like Bush and Pulson lied about the size of the TARP. Obama is taking it a step further lying about the size of his bill AND the type of bill he is passing.
First, this isn’t a stimulus bill!
What percentage of the bill is going to stimulate the economy? Maybe 25% if we’re lucky. What percentage of the bill is going to reperations (i.e. moving wealth from one group to another) to teachers unions, government employees, government subsidized businesses, and the like. Then compare this to what percentage is moving to the actual economy like business, individuals that work for businesses, business investment, etc.. This is not a stimulus bill but a trojan horse reperations bill. At least Bush was honest about what his bill was by calling it a TARP.
Second, the amount of the bill is a lie. There is no way that many if not most of these programs won’t be continued after the sunset dates. Is Obama really going to pass Billions of dollars to hire teachers and government contractors and then when the bill sunsets in 2010-2011 and after say, “Well thanks for stimulating the economy but we’re not going to renew your contract.” No they will renew most of these programs year after year. So take your $800 billion price tag divide this by about 3 years which is how long most of the stuff in the bill will be spent to get your yearly rate then apply some future value projections to the amount and you begin to arrive at 2 to 3 trillion over the next 10 years in cost.
It’s kind of like Obama bought a car for $20,000 but says it only cost him $6,000 because that’s what his payments are in the first year on his debt. If you or I did this people would call us liers when Republican’s and Democrat’s do it they are called our saviours.
FT: Obama is not a liar! He is a saviour. Did you see that clip from his town hall?? Man I’d hate to be in his shoes with those types of nuts showing up all over the place… No way anyone can fulfill that type of hype.
FT: I just saw this little tid bit as well:
All those aviation engineers, computer programmers, secretaries and clerks are thrilled that they now can go do hard labor for 3 years to rebuild an existing bridge and/or road.
FT – What choice does Obama have? The rudest awakening would be to allow everything to fail. That is just not a reasonable or realistic solution, it’s the fantasy of the lunatic fringe.
I have never carried a monthly credit card balance in my entire life. I have virtually $0 debt only a few grand left on a 2006 automobile and I own home outright. I’ve never taken a penny from anyone either.
Again what is you solution?
I don’t think anyone can get us out of this mess and we are at this point about 1/3 into the foreclosures, but I expect do Obama to try and I see nothing other than what he is doing as a solution. Is it preferable to me, let my personal financial life speak for itself.
Lastly and keep it central t this dialog Obama inherited this mess, he didn’t create it!
So Stephen what actually stopped people from buying RVs in the first place? I mean how long before that issue rears it ugly head again? In addition, global warming wasn’t the cause of $4.00 gas now was it?
Also, I’d like to ask you too, what is your solution to this economic disaster? You’re Obama what would you do? Now spare me the tax cuts that’s what we’ve had for the past eight years with Bush and look where we are! Please be realistic!
Lastly, construction jobs for three years pays the bills (mortgages included) and it stops those people from collecting unemployment right? I’d say a man/woman working for their money is the better solution, no? You want to talk about hope well having a job is actually a better way to spread hope than a feel good speech by Ronnie! I mean after all construction workers buy goods too and support all kinds of local businesses. Those money from those contracts will also go towards purchasing big equipment from Caterpillar and to quarry owners for gravel and workers making a decent pay will buy furniture, boots and cars, etc. Construction workers go out to lunch at local restaunts, hoist a beer at the local taverns, buy boots from the local shoe store, etc. In the meantime banks will start lending for loans for cars as workers making money and paying their bills are actually a better risk than those collecting unemployment or welfare no?
Who knows maybe if you worked construction for a living you’d have a different opinion?
YOU HAVE TO START SOMEWHERE!
Well, Jorge, you are correct- I think high gasoline prices are coming around the corner again in the not too distant future. Actually, that is what I was going after by discussing Mr. Obama’s radical environmentalism (his environmental team, after all, is the most liberal of the teams in his cabinet). His policies on energy and his aversion to offshore drilling, etc. should be healthy contributors to future high gas prices. But that will be also aided by his government-mandated fuel efficiency standards as well, that will substantially drive up the costs of producing all American-made vehicles before too long.
If I’m Obama, what I do is give the American people hope. I tell them this economy is about to turn around, despite all the dire warnings. I tell them it is about to apart from any stimulus. I tell them this is very painful, but we are nearer to the end of this recession- I’m optimistic the fourth quarter of 2009 will be the time of turnaround. I tell them I’ve really considered doing a major stimulus, but I elected not to because I want to keep the future in mind as well as the present. I tell them this is the time of sacrifice I had been talking about in my presidential campaign, but sacrifice with a much brighter future in mind- not a future where we all suffer the burdens of the excess government spending. I tell them that the power of the federal government is pretty limited based on my reading of past government stimulus plans, but the power of free individuals is a much more potent tool.
I then do a much lighter package of infrastructure projects and tax cuts for corporations and small businesses, to attract capital. Then I’d take an axe to the federal budget and cut non-essential spending substantially. I still think John McCain’s budget-freeze was a much better alternative to Obama’s free-wheeling spending.
I tell the financial markets that the government’s interventions into the markets must be given time to work, but at the present there are no more plans. I also tell them that once the economy turns around, the values of these “hard-to-value” assets will likely increase. I then instruct the SEC to consider suspending the mark-to-market accounting rules that have been bedeviling the markets in recent months, with the view of reinstuting them once we emerge in a more stable market environment. I also move to suspend government regulations that require x dollars of capitalization for banks (the markets will instruct banks how much capital they need based on the bank’s shareprices- i.e. in this environment, people won’t take shares in a bank they deem to be too under capitalized).
Some of these banks may start to collapse, but I think once they know that the federal government is definitely staying on the sidelines, they will seek buyers for themselves. We might have to endure big name American banks being bought by foreign companies- but who cares in a global economy? If the foreign company is better run- more power to them and let’s all go buy shares in them. The prospect of government interventionism has everyone in limbo right now, in my view. People don’t know what to do one way or the other b/c the government’s policy is subject to so much change. I think everyone is a “wait-and-see” approach, rather than just addressing their issues. I think if the government said, that’s it- we’re out. People would solve the problems themselves.
This would kill Obama’s popularity in the short-term, but the longer term growth these or similar policies would create would boost his popularity. The Gipper did a similar thing in the early 1980′s and his popularity dwindled to the mid 30′s as a result of the market turmoil his policies caused in the short-term. But the 7 years of uninterrupted economic growth that ensued more than made up for that. He left office with pretty high ratings.
As for the construction workers, yeah- I really can’t argue with you there, that this will help them. It will. But my point is not who this will help, but what it will hurt. It takes capital out of the markets that could be distributed elsewhere (this is seen b/c long-term interest rates keep ticking higher each time the government takes on new debt- scarcity of capital is driving up the prices). High long-term interest rates are death to economic growth. It raises the debt levels of the federal government, which will make higher taxes inevitable down the road- those taxes will be a damper on the economy.
Based on what I am seeing so far of Obama’s policies, I’m predicting rising inflation and perpetual recessions from now through the next eight years (right now, I cannot see him losing reelection in 2012, the country’s mood is still so toxically anti-Republican). I’m not talking about a constant depression- but I’m talking about a spurt of growth, followed by two to three quarters of slight contraction or stagnation. Then small growth, then contraction. My perspective in saying this is the 1970′s- that happened throughout the 70′s and into the early 80′s, until Reagan put his foot down on economic populism. I think these recessions within recessions will be caused by decreasing purchasing power of the US dollar as a consequence of inflation and the increase in taxes Obama is all but promising by letting the Bush cuts lapse.
Well- we can continue to argue this, but as I think I’ve said here before, it is going to take 8 years to fully assess whether Obama’s policies are helpful. George Bush was doing great for about 6 or 7 years, but the market distortions caused by globalization and his own spending excesses and the government’s fueling of credit expansion through low interest rates did him in. Few conservatives really think he was the best representation of what conservative economic policy should be.
Anyway- wow- this is long and meandering. Gotta run.
“But my point is not who this will help, but what it will hurt. It takes capital out of the markets that could be distributed elsewhere (this is seen b/c long-term interest rates keep ticking higher each time the government takes on new debt- scarcity of capital is driving up the prices).”
Care to elaborate on the above quote, it may not make complete sense to some?
Lastly how old were you when Reagan was in office?
Chuck, For Reagan’s first term, you voted in that right? 1980? I remember you claiming as much a while back. That you voted against Reagan twice… perhaps I’m misremembering
I am assuming Obama bumped his head on the way in, correct? That or he has tremendous skill at making bad exits versus entrances.
I hope first that it is on the way in and second that if it is the case that he only makes bad entrances. Cause if he makes bad entrances and exits AND they are a metaphor for his Presidency then I will go ahead and find Chairman Mao.
Or he could have just hit his head…
#19 Jorge – here’s a link to the article I had in mind when I wrote that:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN6NIy0FhcSg&refer=home
I haven’t seen an update, but basically long-term mortgage rates keep ticking higher as the government issues more debt. It is interesting b/c as you can see, as the government continues to borrow, it drives up long-term interest rates, which impacts mortgage rates and could ultimately impact the housing recovery negatively. The reason long-term rates go up are varied from what I have read: a) inflation concerns- if people are going to have their cash investment tied up for a number of years, they want to be sure the interest rates they are being paid outpace inflation rates; b) scarcity of capital- in order to attract investors into giving you money over a long number of years in a competitive market where capital is becoming scarce, you have to offer them more attractive rates; c) concerns over default- as the US government takes on more debt with all of its entitlement obligations under Social Security / MediCare, investors are becoming increasingly afraid of default risks – so they want to price in a premium in the event such a thing occurred.
At any rate, government long-term rates influence private rates b/c if you think about it, if investors are demanding that the US government pay higher rates and the US government is an entity that has the power to tax the biggest economy in human history in order to pay those debts, then how much more are investors going to charge individuals and corporations when they borrow- since noone else has the power. Same is true for other countries. If the US is having to pay higher rates, I’ll bet other countries are having to pay even higher rates. I have read some articles in the last several weeks saying some foreign countries (Europe included) are growing increasingly frustrated with the US, since by borrowing we are crowding them out of the markets, making it tougher for them to borrow to finance their own “stimulus plans.”
So – the short of this rambling post here is that the government cannot do any one action without it having ripple effects into other areas. So, while construction workers will do well, what about the ripple effects on the housing industry, on other countries, on businesses trying to borrow to finance expansion, etc.? I say let’s stop the borrowing and let the recession play out. Again- more painful in the short-term, but less onerous over the longhaul.
#21 – it was bumping his head on entry. Which is appropriate, given how much of a circus his cabinet selections have been. Did George W Bush have this much trouble with his cabinet picks? I don’t recall that being the case. I thought the “O Team” was the most efficient transition team in history- oh well.
#20 – I was born in 1979. So, by the time Herbert Walker Bush took office in 1989, I was 9, going on 10. The period from 1 to 9 was among the happiest of my life- and I credit much of that to the Reagan administration.
#22 Yes Chief Crazy Talk you are “misremembering” again.
My first Presidential Vote was in 1984.
#23 That was a nice attempt at dancing around my question Stephen, I’m disappointed.
Jorge:
I think Stephen did a fine job of answering your question in 23. How did he dance around the question? Please elaborate further.
#19
What I meant was,
“But my point is not who this will help, but what it will hurt.”
Elaborate on that statement, por favor.
#19
What I meant was, elaborate on this statement, por favor.
“But my point is not who this will help, but what it will hurt.”
Jorge – thanks for clarifying. What I was hoping to say in post #23 is that it could hurt people with ties to the housing industry (by driving up mortgage rates, which would further dampen new home sales); it could hurt other countries who are trying to borrow and fund stimulus packages of their own; if it spurs inflation as I think it will- it would hurt lower middle class and lower class wage earners who might live paycheck to paycheck and it would definitely hurt retirees who live on fixed incomes; it makes tax increases in the future almost inevitable, so that will be a damper on future economic growth. I am inclined to believe that the ripple effects throughout the broader US and world economy could be far worse than that.
http://news.yahoo.com/s/time/08599201562900;_ylt=Am_IDnw02A6ntWhwRX2Dl2da24cA;_ylu=X3oDMTM1YzV1MzZxBGFzc2V0A3RpbWUvMjAxMDA5MDIvMDg1OTkyMDE1NjI5MDAEY2NvZGUDbW9zdHBvcHVsYXIEY3BvcwMzBHBvcwMzBHNlYwN5bl90b3Bfc3RvcmllcwRzbGsDaG93YmFyYWNrb2Jh
Revisiting Elkhart, one and a half years later.
Back in Indiana, the evidence of Obama’s political failure is particularly glaring. During his early, heady days in office, the President decided to make Elkhart a personal cause. A once thriving manufacturing center of 50,000 on the Michigan-Indiana border, famous for its musical instruments and recreational vehicles, the Elkhart region saw the steepest jump in unemployment of any metropolitan area in the nation during the economic crisis. That helped Obama win Donnelly’s district by 9 points, nearly George W. Bush’s margin in 2004, and Obama returned to Elkhart just weeks after taking office. “I promised you back then that if elected President, I would do everything I could to help this community recover,” he announced. “And that’s why I’ve come back today.”
Since then, he has been back twice more, once to speak at Notre Dame and once to herald a new electric-vehicle plant that would be built with federal support. In the southern end of the district, thousands of jobs at parts plants were saved when Obama decided to bail out the auto companies.
Yet all of Obama’s personal and financial appeals have been swamped by the depth of the recession and have had little visible effect. Donnelly, who flies home every weekend to work in his district, felt obliged to run against Obama to save his job. And his Republican opponent, Jackie Walorski, says she is often approached by Obama voters who want to vent. “This has burned people,” she says. “Their words, not mine: ‘Betrayed by the health care vote.’ ‘What are they thinking when it comes to spending?’ ‘Broken promises when it comes to jobs.’ ” At one recent Walorski house party, held at dusk beside a cornfield, two attendees, Matthew and Frances Napieralski, identified themselves as former supporters of the President. “He’s not what I voted for,” said Matthew, who runs a plastic-injection-molding shop in town. “It’s a shame that they led us to believe one thing,” said Frances, “and then everything changes.”