Although Obama promised all in a televised speech that he would push for a stimulus bill that had no pork, or earmarks, (as senators and representatives like to call them) it is entirely unrealistic to actually expect him to be able to deliver on this promise as long as our President does not have the line item veto. In the absence of the ability to trim the pork from any bill, one item at a time, once it has finally found its way to his desk—our President only has two choices. He can either veto the entire bill, sending a message back to congress and the senate to rework things until they get it right, or he can sign the bill into law and get things into motion so our economy can begin to recover (assuming that the bill will actually trigger said recovery).
By vetoing the entire package he risks alienating everyone in congress; by signing the bill anyway he risks showing weakness or appearing as though he cannot deliver on his promises. What to do, you ask? It is quite the rock & the hard spot situation. There is a big difference between a lone senator not voting for a bill because of a certain clause, or the absence of one—and the President exercising his veto on a package that he has fostered in the first place. Welcome to the White House.
And now congress has sent yet another stimulus bill to the President’s desk for him to sign—or not. The fact that the earmarks alone on this bill amount to more than a billion dollars serves as an example of just how great of a challenge Obama faces as he tries to bring change to Washington. And that is only his congressional challenge. He faces even greater issues out in the private sector from recipients of the stimulus money. Without nailing down how the money is to be spent in clear, strict terms much of the money will ultimately wind up in foreign markets where it won’t even resemble being used to jump start an American economic recovery he intended to cause with this package.
This is exactly what has happened with the banks. When the TARP funds were doled out to the banks and mortgage companies many banks held on to the money and intended to use the funds for mergers and acquisitions instead of putting the money out in the street to consumers as the money was intended for. Just yesterday the Bank of America was in the news as having spent $7 billion, which is over half of the $15 billion they received in TARP funds, in investment in the China Construction bank. They are not the only bank that didn’t use the TARP funds as the government intended them to. The leaders of the banks which received the largest TARP amounts were hauled out on the carpet in front of angry members of congress recently to answer questions geared to find out why they didn’t change their business model when they got the money.
And it isn't just the banks. General Motors went through $14 billion in not much more time than it took to read the check, then it returned to Washington requesting more funds. Many economists would say that it might just be the best solution to let the market cleanse itself and allow businesses that cannot steer a profitable course to simply fold and make room for fresh capital to emerge in the form of new and more resilient companies. The painful truth about this particular company’s possible failure is the enormous number of workers who will lose their jobs if this particular company dies.
To add more to this mix, the Obama administration’s economic philosophy on how to bring the nation back on track seems to run contrary to the beliefs of the investor class, which is evidenced by the steady downward trend in the stock market. American investors have logged over $11 trillion in wiped out assets since Obama has taken office. If this is to be used as a barometer to measure Obama’s success rate so far it doesn’t look good. Today’s upward surge in the Dow Jones Industrial rating is encouraging, but only if it is the beginning of a steady period of growth and not just a blip on the chart.
Also, Obama is having difficulty getting the Treasury Department fully staffed. Challenges to appointments keep hindering efforts to gear up for the fight for economic recovery. So what exactly, one may ask, can the President actually do? And, is he on the right track? It is just possible that the solution to our dilemma lies in trying new methods of combining monetary and fiscal policy. But then again, it looks to many like we are already in experimental mode.
By vetoing the entire package he risks alienating everyone in congress; by signing the bill anyway he risks showing weakness or appearing as though he cannot deliver on his promises. What to do, you ask? It is quite the rock & the hard spot situation. There is a big difference between a lone senator not voting for a bill because of a certain clause, or the absence of one—and the President exercising his veto on a package that he has fostered in the first place. Welcome to the White House.
And now congress has sent yet another stimulus bill to the President’s desk for him to sign—or not. The fact that the earmarks alone on this bill amount to more than a billion dollars serves as an example of just how great of a challenge Obama faces as he tries to bring change to Washington. And that is only his congressional challenge. He faces even greater issues out in the private sector from recipients of the stimulus money. Without nailing down how the money is to be spent in clear, strict terms much of the money will ultimately wind up in foreign markets where it won’t even resemble being used to jump start an American economic recovery he intended to cause with this package.
This is exactly what has happened with the banks. When the TARP funds were doled out to the banks and mortgage companies many banks held on to the money and intended to use the funds for mergers and acquisitions instead of putting the money out in the street to consumers as the money was intended for. Just yesterday the Bank of America was in the news as having spent $7 billion, which is over half of the $15 billion they received in TARP funds, in investment in the China Construction bank. They are not the only bank that didn’t use the TARP funds as the government intended them to. The leaders of the banks which received the largest TARP amounts were hauled out on the carpet in front of angry members of congress recently to answer questions geared to find out why they didn’t change their business model when they got the money.
And it isn't just the banks. General Motors went through $14 billion in not much more time than it took to read the check, then it returned to Washington requesting more funds. Many economists would say that it might just be the best solution to let the market cleanse itself and allow businesses that cannot steer a profitable course to simply fold and make room for fresh capital to emerge in the form of new and more resilient companies. The painful truth about this particular company’s possible failure is the enormous number of workers who will lose their jobs if this particular company dies.
To add more to this mix, the Obama administration’s economic philosophy on how to bring the nation back on track seems to run contrary to the beliefs of the investor class, which is evidenced by the steady downward trend in the stock market. American investors have logged over $11 trillion in wiped out assets since Obama has taken office. If this is to be used as a barometer to measure Obama’s success rate so far it doesn’t look good. Today’s upward surge in the Dow Jones Industrial rating is encouraging, but only if it is the beginning of a steady period of growth and not just a blip on the chart.
Also, Obama is having difficulty getting the Treasury Department fully staffed. Challenges to appointments keep hindering efforts to gear up for the fight for economic recovery. So what exactly, one may ask, can the President actually do? And, is he on the right track? It is just possible that the solution to our dilemma lies in trying new methods of combining monetary and fiscal policy. But then again, it looks to many like we are already in experimental mode.
No comments:
Post a Comment