The news events of the last few months have certainly put the Obama Administration in a peculiar position. The Gulf crisis notwithstanding, most of these events have been created by this president and his staff.
Team Obama went the the G20 Summit in Toronto this weekend to chide the other 19 nations to continue to stimulate their economy through Keynsian economic principles. “Not so fast”, said the other countries. “We have to make choices, and right now, we choose fiscal solvency and prudence”. What a concept!
Passage of the Financial Institutions Reform package was always tenuous, at best, but the death of Senator Robert Byrd over the weekend makes passage more difficult. One less Democratic vote means that it’s more likely that Republicans can filibuster this package, and this is a good thing. Here’s why: Any bill that increases regulation, drives up costs to the consumer, and squeezes financial services companies’ margins will negatively affect the economy. The costs of increased regulation always get passed along to the consumer in some way, shape or form. Limiting profits also limit tax revenues to the US Treasury in the form of corporate taxes, as well as limiting the taxes paid on dividends. Finally, no company will hire if they have to choose between new employees and profitability. Profits first, then job growth.
Of course, this Administration believes that more government, and more regulation is better than the alternative. Which brings us back to the oil slick in the Gulf of Mexico. Government could not solve this problem. President Obama’s unwillingnes to recognize this fact, rather, to pin it on the previous Administration, has convinced me that less Washington is the answer, not more. Incidentally, government could not solve the Katrina problem either. It was private philanthropy, including church-based organizations, that had the greatest impact during the Katrina aftermath.
It would seem that if anything, this Administration, and especially the President, is deliberately trying to keep people from focusing their attention on the economy, jobs and the fact that companies continue to shed them. This is preferable to actually implementing policies that will create jobs, stimulate the economy, and generate revenues back to federal, state and local treasuries.
On Friday, the Labor Department will release the non-farm employment numbers for June. Consensus estimates suggest that the economy shed 145,000 jobs this month, and if so, that the unemployment rate will rise to 9.8% from 9.7%. Look for President Obama to do some if not all of the following:
- Create a diversion
- Blame it on the financial crisis and the previous administration
- Express a need for additional stimulus
Do not expect him to take responsibility, or offer any potential solutions other than those expressed above. This will prove to solidify Republican gains in both houses of Congress in November. The country wants solutions and for a responsible President. It will have to wait another two and a half years.