Economic insult to injury was delivered to the American people in a series of numerical misrepresentations and deliberately skewed data in order to perpetuate the illusion of promising economic news. (1) Those opposed to runaway government spending will describe these assertions as lies. The Toledo Chrysler Plant served as a recent backdrop for the Obama Administration’s plea for more spending time while it sought to overlook the gloom of economic realities. A message of economic delusion delivered in the typical, nonchalant President Obama fashion. (2) The American forefront however, is an economy riddled by a reality in stark contrast to the Obama led backdrop.

The nation has suffered its worst recession recovery since World War II in terms of both the depth and persistence of job loss. (3) According the Bureau of Labor and Statistics, a mere 54,000 jobs were added in May while 13.9 million Americans remain unemployed. (4) Not only have home prices fallen to a new two year low, the housing market has suffered a "double dip” and is now in worse crisis than the housing collapse of the Great Depression. (5), (6) The forefront for Americans is a reality is not of the laughing, or joking matter the president continually makes light of. In spite of such a displaced approach in addressing America’s economic plight, the economy is a very serious matter.

American spending addiction

Keynesian theorists have concluded that increased spending is the panacea for the ailing American economy despite the Obama Administration’s lack of positive outcomes through its spending. Again, the administration seeks to double down on spending. The concept of spending our way out of recession is based upon the concept that the administration failed to assess the severity of the recession and implemented stimulus and spending programs that were far too conservative. (7), (8), (9) "He [Obama] should tell them the economy needs a bigger stimulus to show improved job numbers…” former Secretary of Labor, Robert Reich wrote in support of increased spending. (7) It is predicted that spending will hit 3.8 trillion this year; of that, 1.6 trillion will be borrowed. The Keynesian claim is the economy needs more spending and more debt. Thus far, this has not only failed, it is causing those whom hold America’s debt to grow anxious over America’s irresponsible handling of the economy and spending programs that are causing the U.S. Dollar to rapidly lose value against other currencies.

China, which owns 1.2 trillion dollars of America’s deficit, now claims America has defaulted on the national debt. As the U.S. Dollar loses value, it erodes the wealth of American creditors. "In our opinion, the United States has already been defaulting,” president of Dagong Global Credit Rating Co. Ltd. Guan Jianzhong purportedly stated to the Global Times. (10) For the fifth straight month, Beijing has cut its holdings of U.S. Treasuries. America’s largest creditor has raised concerns about the inept fiscal strategies and the failure of America to disclose the risk associated with assuming American debt. China’s criticism of the U.S. has merit and the International Monetary Fund now predicts China’s economy will surpass America’s by 2016. As criticism mounts, the American economy falters while the Obama Administration refuses to acknowledge the depth of the crisis.

Sinking into economic failure

As America contemplates rescuing the sinking economy of Greece, we are sending one sinking economic ship to rescue another. The public focus is on the 14.3 trillion dollar debt. This fails to address the government figures of nearly 50 trillion dollars in entitlement spending. Of great concern is also the stimulus spending of 2008 and 2009, which brings American debt closer to "100 trillion dollars” according to Bill Gross, Pimco founder and co-CIO. (11) In viewing the true American debt and poor spending habits, the American economy, driven through it entitlements is an economy in worse condition than that of Greece. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly." Gross told CNBC. (11)

Moreover, this demonstrates the lack of sustainability of the Keynesian economic spending strategies from which the Obama Administration refuses to yield. It is perplexing to many Americans that the Obama Administration addresses the American economy in such nonchalant manners and simultaneously considers lending fiscal aid to nations to advance questionable foreign policy. The Obama Administration’s economic disconnect from the American people has been made the subject of strategy memo addressing the loss in confidence in Democrats when it comes to their handling of the American economy.

Blatant denial

The last U.S. President to be reelected with an unemployment rate greater than 8% was Roosevelt; a very sobering statistic. (12) It is felt that the confidence in the Obama Administration is waning because the voter base sees President Obama continually joking about the economy. This light-hearted approach to the economy is interpreted as the Obama Administration not taking the plight of Americans seriously. "The White House metaphor of getting the car out of the ditch on to level ground and not giving the car back to the guys who drove it into the ditch was unconvincing, too light-hearted, backward-looking and out-of-touch. People thought they were still in the ditch.” the executive summary states.

Their idea to return the Democrat Party to ascendency on the economy; they must first forget the past and forge a future that pits progressive spending strategies directly against the conservative budget cut approach. In doing so, the Obama Administration, "regardless of economic developments,” will reap dividends in that Americans will focus on the seriousness of the approach and become more willing to overlook the failings unsustainable Keynesian spending will undoubtedly yield. The good in the summary is that Democrats are beginning to realize the casual approach to the economic conundrum is doing more damage than good. The bad in the summary is that is passively defends spending as the only option that will lead to economic recovery while further insulting the intelligence of President Obama supporters.

Time for a new reality

The Keynesian economist sees spending as the only option. When spending initiatives fail, two reasons are provided; a) spending was insufficient and too conservative, or b) spending initiatives were delivered for an insufficient period. (13), (14) Spending is always the answer and never viewed as a potential root of the economic problem. Jesse Taylor and Richard Vedder of the Cato Institute present a thought provoking, anti-Keynesian solution; cut spending. "Government canceled war contracts, and its spending fell from $84 billion in 1945 to under $30 billion in 1946," Taylor and Vedder wrote. "By 1947, the government was . . . running a budget surplus of close to 6 percent of GDP. The military released around 10 million Americans back into civilian life. Most economic controls were lifted, and all were gone less than a year after V-J Day. In short, the economy underwent . . . the 'shock of de-stimulus.'" (15), (16) More importantly, "labor markets adjusted quickly and efficiently once they were finally unfettered." The idea that spending is the only solution is clearly flawed. Government has used spending for purposes of government growth under the guise of economic stability. Lost in translation is the damage reckless spending has caused. The post World War II recovery represents the sharpest recession recovery to date. A recovery accomplished by reducing government, regulation and spending; missing economic concepts of the Obama Administration.

To right the American ship of economic despair, government must reconsider its spending habits and reevaluate its position on entitlements that have more than quadrupled in the last 50 years alone. (17) Currently, the Obama Administration insists that spending is the only solution and overtly resists calls for budget cuts, caps on the debt ceiling and any initiative that excludes increased spending as an option. In lieu of assessing spending as a potentially detrimental and toxic hinderance in today’s recession recovery, the Obama led administration seeks yet again to initiate further spending that forth coming generations will foot the bill for.

Every month this administration continues its spending, American prosperity is lost.

References

1. Kessler, Glenn. President Obama’s phony accounting on the auto industry bailout. Washingtonpost.com. [Online] 06 07, 2011. [Cited: 06 12, 2011.]

2. n.a. Obama’s Wrangler joke draws reaction from Chrysler workers. Wheels.ca. [Online] 06 06, 2011. [Cited: 06 12, 2011.]

3. Weisenthal, Joe. Chart of the day: Scariest job chart ever. Businessinsider.com. [Online] 03 04, 2011. [Cited: 06 12, 2011.]

4. n.a. The Employment Situation - May 2011. Washington, D.C. : Bureau of Labor and Statistics, 2011. USDL-11-0809.

5. Stevenson, David. MoneyWeek Roundup: House prices fall more than in the Great Depression. Moneyweek.com. [Online] 06 04, 2011. [Cited: 06 12, 2011.]

6. Cox, Jeff. US housing crisis is now worse than Great Depression. Moneycontrol.com. [Online] 06 14, 2011. [Cited: 06 14, 2011.]

7. Reich, Robert. Why We Need Even More Stimulus. Huffintonpost.com. [Online] 11 05, 2009. [Cited: 06 12, 2011.]

8. Sherk, James. U.S. Chamber and AFL-CIO Join Forces to Lobby for Spending Spree. Heritage.org. [Online] 06 12, 2011. [Cited: 06 12, 2011.]

9. Summers, Lawrence H. Larry Summers: More Stimulus Needed for Job Crisis. Huffingtonpost.com. [Online] 06 13, 2011. [Cited: 06 13, 2011.]

10. n.a. China - America's biggest creditor - cracks the whip to make sure Washington can pay up amid claims U.S. is already defaulting on massive debt. Dailymail.co.uk. [Online] 06 11, 2011. [Cited: 06 12, 2011.]

11. Cox, Jeff. US Is in Even Worse Shape Financially Than Greece: Gross. Cnbc.com. [Online] 06 13, 2011. [Cited: 06 13, 2011.]

12. Greenberg, Stanley, Carville, James, Walker, David and Seifert, Erica. A Path to Democratic Ascendancy on the Economy. Greenburgresearch.com. [Online] 06 02, 2011. [Cited: 06 12, 2011.]

13. Steiner, Craig. Obama's Misguided Lack of Job Creation. Craigsteiner.us. [Online] n.d. [Cited: 06 12, 2011.]

14. Steiner, Craig. The Paradoxical Insanity of More Stimulus. Craigsteiner.us. [Online] n.d. [Cited: 06 12, 2011.]

15. Taylor, Jason E. and Vedder, Richard K. Stimulus by Spending Cuts: Lessons from 1946. Cato.org. [Online] 06 2010. [Cited: 06 12, 2011.]

16. Jacoby, Jeff. Slash Spending and the Economy Will Bloom. Townhall.com. [Online] 06 11, 2011. [Cited: 06 12, 2011.]

17. Needham, Mike. Rejecting American Pessimism. Townhall.com. [Online] 06 13, 2011. [Cited: 06 13, 2011.]