Dear President Obama:
Shortly after your election I wrote the following letter to you. In retrospect it appears that you ignored all my suggestions. In fact, it seems plain that you did exactly what I was afraid you would do. To drive home the point I have reproduced the letter in its entirety here. It was first published by the New Media Journal on January 14, 2009, shortly before your inauguration. I don't expect you to change now, either. You seem relentlessly determined to persist in the most breathtakingly mindless, destructive policies ever pursued by a sitting president. But I do reproduce it here to show that your intentions were painfully clear to many of us from the beginning, and that awareness has grown to encompass a huge swath - if not a majority - of the voting public. The emperor truly has no clothes. Your intentions are bare naked before the world.
Dear President Elect Obama:
I understand that our economy is in rough shape. Decades of excessive federal entitlement spending, bailouts and risk guarantees have created an American culture that discounts financial risk. The toxic combination has ushered in a period of unprecedented uncertainty, along with a downturn which, though severe, is not, nor does it have to continue to be as severe as you and others are saying.
I understand you were born, raised and became thoroughly entrenched in Chicago politics. Indeed it is likely the main reason we are calling you “President Elect” today. I am probably tilting at windmills, but as you well know, “hope” springs eternal in the hearts of all men. With that in mind, please hear what I have to say.
For better or for worse, rightly or wrongly, the American people have given you and Congressional Democrats a rare opportunity to rule with little fear of challenge, either from Republican politicians or the public at large. You have the vast majority of the national, even international news media, enthusiastically, perhaps one could even say fanatically, on your side; so they will doubtless continue to regale your leadership, regardless of whether it leads to success or calamity.
So you really have little to fear from any outcome, at least in terms of what will be said about it in the media outlets that most people see. In such an atmosphere it is tempting to do what politicians do best: make sweeping rhetorical promises to save the country, while using the opportunity to go on a massive vote buying spree. This is unfortunately what many Congressional Democrats and some Republicans have in mind when you toss out numbers like a $1 trillion “stimulus” package. It also sounds like what you are preparing to do with your dire warnings of apocalypse. It may soften up the populace for what you want to do, but is adding to the uncertainty and fear in an already jittery market. Please knock it off!
You have said that “At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe." Even assuming you and Congress have the best of motives, a “hopey” assumption if ever there was one; if you intend to stimulate the economy mainly through government spending your idea is already headed for failure.
Government, by definition, takes. It does not produce. Government expenditure is by definition a zero sum game. With your $1 trillion proposal, either the government transfers $1 trillion from the productive private sector through taxation, which in-and-of-itself would have a catastrophic recessionary impact, (hint: don’t expire the Bush tax cuts just yet) or the government borrows that amount, removing funds from the investment stream that would otherwise be available for productive enterprises in the private sector. Either way, you are robbing Peter to pay Paul. It’s great to try to shore up the losers, but what happens to the winners?
The private economy is an engine of growth. Companies produce goods and services that people want and need to sustain their lives and be more comfortable and secure. As businesses thrive, the profits accrued generate still more business, more income, more jobs, more prosperity. Even the communists understand that prosperity derives only from growth in real (inflation adjusted) incomes. That only comes with increased labor productivity – i.e. more output per worker. That only comes from companies finding newer and better ways to produce goods and services that are needed and wanted.
Now there are of course the externality arguments that the private market fails to properly provide for “public goods” such as national defense, education, health and so forth. It is a non-sequiter however, to assume that just because the private market fails to adequately provide for these goods that the government does better. In fact, with the exception of national defense, it could be argued that the government has made matters significantly worse. That is certainly true with regard to education and health. Government meddling in these areas is primarily responsible for the messes they are in today.
But that argument misses the point anyway, because your $1 trillion is supposed to be an economic stimulus package. We need economic stimulus now, not ten or twenty years from now, when, if ever, that kind of spending bears fruit. You cannot stimulate the economy by taking resources from its productive sector, the private market, and transferring it to others.
It can’t do it! It is such a simple concept, it is deeply discouraging to find that it has to be explained to anyone, let alone someone charged with leading our nation! To add onto this various other social goals, like creating a false economy in “green jobs” only adds to the misallocation of resources, requiring permanently increased government spending at the expense of the productive economy. It is a prescription for calamitous disaster.
Your proposals for “doubling the production of alternative energy over three years, updating most federal buildings to improve energy efficiency, making medical records electronic, expanding broadband networks and updating schools and universities” are frankly idiotic. None of these will address the current economic crisis, which needs to be addressed NOW, and doubling the production of alternative energy will actually hurt the recovery. It will add, not reduce costs unless and until it can be produced more efficiently and even then will produce only a marginal benefit.
And how do you intend to create “3 million new jobs”; with government spending? In saying that 80 percent of those 3 million jobs would be in the private sector, how do you intend to boost the private sector? As I explained earlier subsidizing one sector by transferring income to them will negatively impact all the others. And does it mean the other 20 percent (600,000 jobs) would be government jobs? If so you are proposing to expand the federal non-defense workforce by over 20 percent. Are you aware of that? Such an action is NOT the answer.
But don’t believe me. You don’t have to. There is a glaring prior example to instruct you in results.
Some have called your plan the “New, New Deal,” recalling the nostalgia of FDR and his depression era New Deal. Please don’t do it to us! FDR’s New Deal insured that our economy remained in chaos from 1933 until World War II. In 1928 the unemployment rate was 3.2 percent. Following the stock market crash in 1929, the economy moved into recession. By 1932 it had fallen to 24 percent. Over the same period inflation adjusted GDP fell 25 percent. Most of this decline was the direct result of federal intervention initiated by President Hoover.
FDR expanded many of the programs Hoover had started and added his own. During this period, non-defense government spending more than doubled. Even with that spending however, the unemployment rate averaged 13 percent for the period. Furthermore, when those make-work programs came to a close, as they had to eventually, the temporarily employed workers were no better off, having to transfer their government make-work experience into real, permanent, productive jobs. Fortunately for FDR, World War II came along and the U.S. military became the replacement employer, though one hopes it won’t take another world war to save us from your “recovery” program.
FDR’s Secretary of the Treasury, Henry Morganthau admitted the failure publicly:
We are spending more money than we have ever spent before, and it does not work. ... I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. ... I say after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt, to boot.
FDR created a massive tangled web of other problems with his overbearing “solutions” - too many to be listed here, but such an outcome is guaranteed when politicians start throwing money around. And the mess increases exponentially when 535 Congressional politicians with self-serving vested interests get involved in the decision making, regardless the President’s motives. It gets even worse when state and local politics comes into play, as it inevitably does.
Don’t repeat history. Don’t make FDR’s mistakes all over again. His image may get boosts from misguided historians and flattering movies like Seabiscuit, but the Great Depression was a drag, and he made it much worse.
If you want to spend that money, there is a much simpler method. It will provide a huge, immediate stimulus to the economy, will not require any kind of burdensome government bureaucracy to oversee its implementation, and is guaranteed to make the most economically efficient use of those dollars. Simply declare a tax holiday. Texas Representative Louie Gohmert already has legislation proposed for the remaining $350 billion of the initial bailout money.
If this is the unprecedented crisis you insist it is; tax relief should be the primary consideration. After all, it is the heavy load of federal, state and local taxes that forces families to take two jobs and work extra hours. There have been mumblings that you are considering tax cuts of $300 billion. Why not make it for the whole $1 trillion?
Given that federal receipts currently run about $2 trillion, this would provide 6 months worth of 100 percent tax relief for every American taxpayer. It would mean immediate income of approximately $3,000 for every man, woman and child in the United States. Is that not better than shuffling a little here, a little there, to be administered by so-and-so, who then doles out a bit over time to whoever he/she wants? Would it not be better to really help people NOW, instead of creating massive new government make work programs that will take years to implement, and likely become permanent whether they provide any temporary relief or not?
I hope – there’s that word again - ardently, that you will take my message to heart and alter your plans accordingly. Perhaps we may after all see your campaign slogan “hope” put into constructive, positive action.
You do not have to. As I have said, your admirers in the press will likely congratulate you whatever you do. The ball is in your court. But this crisis requires a genuine solution. It requires real leadership, real greatness, not merely a continuation of empty campaign rhetoric, with typical Chicago-style backroom payoffs to political patrons. If you want to be truly great, then do what’s truly right. We will all love you for it, for a change your Party will have the right solution to an economic problem and Party will reap the rewards of genuinely saving us from economic collapse. If not, the slogan that brought you to power will be lost in the certain wreck to follow as “just words… just speeches.”
Don’t do that to us, please.
Regards,
Jim Simpson
Economist, former OMB Budget Examiner, and gravely concerned American
Comments
Unfortunately, many of us are realizing the truth about Obama much too late. Great letter Jim.
Don't think he paid any attention to your letter Jim.
Wow, thanks for sharing that Jim. Too bad he didn't listen. Maybe he will hear us in November!
Dear Larry:
LOL. No kidding!
Regards,
Jim
Mona:
Is this the Mona who has been sharply critical on these pages in the past? Are you having an epiphany? Good! Late, but better late than never. When Whittaker Chambers broke with the communists and became a conservative Christian, he was convinced he had chosen the losing side. Coming from the Leftist underground, he knew how organized, determined and ruthless they were. But we have always had something the Left never had: a cause truly worth fighting for. It is hard to face facts, and it is easy to be taken by the Left's lies - it is what they know best. But the truth rests within every heart, waiting to be unlocked. Sometimes it takes a while to find the key. Welcome to the good side. We may yet prevail.
I hope so-called conservative candidates read and understand the major points here. Government is specifically NOT the answer, and it is specifically THE ENEMY of freedom, productivity, American success. It's easy for these candidates to agree that FDR's and Obama's policies are big-government, but so far, I hear these candidates speak the same methods, just for smaller programs, to help solve difficult problems. Don't let them use government for today's problems. If that's the best we have available, then the American idea of government really ISN'T good enough. We need to grapple with that realization, every time we agree with a seemingly-necessary government fix. Let's help our current "conservative" candidates REALLY believe in the American design of government and its preservation of our GOD-given and natural liberties.
Again, Jim. You are right on. It is apparent that he hasn't read your letter, nor does he intend to. History repeats itself, but this Islamic president doesn't really care what he does to this free nation. I'm so looking forward to November to send the message that we won't let this happen to our Country.
That is the goofiest, longest-winded letter I ever tried to read. You need to do some editing, brother. Exerpt: "I understand you were born, raised and became thoroughly entrenched in Chicago politics." Obama was born in Hawaii, raised in Indonesia and didn't move to Chicago until well after graduating from Harvard Law. If you can't even get basic, well-known facts right, what hope is there for you? If you're just trying to be ironic that doesn't work either. I'm sure Obama round-filed this nonsense after the second paragraph.
No, that other Mona is fake. Your letter doesn't show much insight, plus the writing is pretty bad. You should read Krugman in the NY Times.
The Manchurian Candidate round filed your letter, Jim.
The Original Mona:
Too bad. Thought there was hope for you. Why don't you write yourself, since you seem to be such a good critic?
Samantha:
Okay you missed the meaning. Not surprising at all. Obama was not technically "born and raised" in Chicago, but WAS born and raised and schooled on Chicago-style communist ideology. Frank Marshall Davis was from Chicago and probably arranged for Obama's speedy ascendancy in Chicago politics. His parents were communists. His grandparents were communists. the American Communist Party was started in Chicago in 1919. See, I give my readers credit for having a little more intelligence than you are apparently able to muster. As to the rest, well, the Left wouldn't know a fact if it smacked them in the face. You apparently belong with that crew.
are you sure you are an independent? some of this sounds very similar to conservative views. I just think it is hilarious that much of this is being blamed on Obama. Guess it doesn't matter that Bush slammed the country in a major jam for 8 years prior to Obama. And, if you all knew the history of each party, you would know that the Democrats seem to be trying to go back to their strayed roots of developing social programs that will help the underserved instead of just leaving people to fend for themselves. Lastly, how do you define "doing what is truly right?" Again, Bush destroyed the country way before Obama won office. I think given the state of the country prior to his presidency, Obama is doing a pretty good job.
This was probably the FIRST of the many times he has ignored American sentiments. And I also found it amusing that at least one person had to comment once again that Bush is to blame for the entire mess. I think everyone agrees that Obama "inherited" problems but it's high time he took credit for the mess he has created in his SHORT term thus far! Time for him to step up to the plate and be a man and stop continuing the path of destruction he has set us on!
That's just poor writing. Born, raised and thoroughly entrenched in Chicago politics...This is a series, so you're saying in effect he was born in Chicago politics. I got it that maybe you were trying to be cute or ironic but it just didn't work, Jim. Obama's not going to read it when you insult him at the get-go. Sorry, chump.
Independent is the new Republican label, when you don't want to admit you're really GOP or libertarian sympathizers. Independent is also when you don't have a developed ideology and will bend whichever way the wind is blowing. In Jim's case, he's the one blowing the hot air.
BTW, the Manchurian Candidate obviously is John McCain.
And what foreign candidate does this make Obama?
Jim:
Do your homework please on government spending and everything else. Where are your facts to back up what you are actually saying? Nothing you are saying is actually rooted in reality and is a total misrepresentation of FDR and the New Deal, which is the only deal that got us out of the depression in the 1930's. Now, things are different, but since you haven't analyzed how they are different and you don't understand facts, I cannot tell you why spending our way out of the current depression isn't working. Another point: why do you call yourself an independent? There is nothing independt about you because an independent is someone who has a balanced perspective and you are not such an individual. In fact , I would call you a conservative republican and not an independent.
Susanna D:
Actually there are quite a few numbers and studies to back up everything I say. FDR ruined the economic recovery during the Great Depression, fueling what growth there was by transferring wealth from the private sector to the public sector, doubling spending in the process and setting a precedent that cemented big government in place for the foreseeable future. If you want to learn how this has impacted the economy over time, check out Martin Feldstein. He has studied the effect of Social Security on savings and economic growth for most of his life. He is a Nobel laureate, though by your standards maybe he doesn't know what he is talking about either. I check my facts very carefully and usually use the latest data I can find. If you would like a good rundown on the Great Depression, go to usgovernmentspending.com. As for my independence, it refers to my thinking, not my party affiliation. Look for reasons to understand rather than disparage and you might get further.
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