Economic Reality

If you don’t know where you’re going any road will take you there.

So it says in the title line of the George Harrison song and so it is with the economic recovery plans, or lack thereof, in Congress and the Obama White House. The economy continues to falter and the unfortunate truth is that those in charge of turning it around are completely clueless as to what to do next.

The massive, debt laden economic stimulus package was passed 9 months ago and as expected by anybody who can add 2 plus 2, has had absolutely no stimulating effect on the economy. Nearly one trillion dollars was spent or soon will be on everything from the habitat reclamation of California field mice to gang banger tattoo removal machines. None of this blatant partisan spending spree ever had a chance of actually improving the nation’s economy, but the Democrat leadership in both the House and the Senate were bound and determined to get their pet projects funded while the country was still euphorically celebrating the coronation of the new Messiah.

The biggest problem is that not only does the ruling Democrat Party not have a workable plan; they don’t even have a workable premise on which to base a plan.

As stated by John F Kennedy “The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.” Democrats have been persistent in developing the myth that the poor and middle class suffered greatly under the Bush tax cuts. Obama’s claim of the need for increased taxes on the rich has been proven time and again to be the exact wrong policy. The facts as shown by the governments own Congressional Budget Office shows clearly that the greatest increase in income and wealth over the course of the Bush tax cuts was the bottom 20% of earners. A subsequent study by the Treasury Department found the exact same thing. The data from these and other studies caused Nobel Prize winning economist Robert Fogel to write “In every measure that we have bearing on the standard of living the gains of the lower classes have been far greater than those experienced by the population as a whole.”

The myth of the repression of the poor through tax cuts that will benefit only the wealthy may be a popular mantra to run a political campaign, but the economy is not based on political rhetoric. The economy is based in the reality of numbers and when it comes to reality the Democrats numbers just don’t add up.

In manufacturing where countless workers are currently laid off or working reduced hours the much-hyped stimulus package has done nothing to curtail the industrial death spiral. At the recent national Infrastructure and Steel Conference the president of the American Institute of Steel Construction said that the Democrats alleged stimulus package should be called “The case of the vanishing billions.”

The overall manufacturing output received a temporary bump thanks to the Cash for Clunkers program in August, receiving its best showing of expansion since June of 2008. But the September report showed not only a slowing in the expansion but a rapid return to a contraction In manufacturing as the short lived rebuild of cars quickly catches up with the now depleted demand.

My ever faithful web monkey sent me a report from CNN that claims 47% of households will pay no federal income tax. That equates to roughly 71 million people. Yet according to the governments own studies each of these 71 million folks saw a greater increase in their incomes than the top 5% or earners who already pay 60% of all the taxes.

When it comes to developing a plan that will work to actually stimulate the economy and reduce the economic pain and suffering of all Americans, the Democrat leadership in power must first look at the real numbers and drop the charade of victimhood. Otherwise we will simply get more of the same and the deficit, which is already forecasted to exceed $11 trillion in the next 10 years, will bury us and our way of life under a debt load that is not only unmanageable but perhaps fatal.

And where is our president during this time of economic national emergency? Why he’s in Copenhagen trying to ensure the Olympic Games coming to Chicago which will pay huge personal financial rewards to some of his most ardent supporters.

More on that tomorrow.