Because of the title of the Op-ed, it intrigued me to read and I found certain contentions I agreed with and others I didn't, so I desired making a few comments. I will address only certain aspects of the article. To read it in its entirety, simply click the link below:
http://online.wsj.com/article/SB10001424052702303657404576363984173620692.html?mod=WSJ_hp_mostpop_read
Under the Opinion header, was this statement, "Expect more bad news until someone enacts a plan to bring deficits under control without raising taxes." This sentence is the equivalent of saying 'Expect to be penniless until someone enacts a plan to bring you untold riches without inheritance or ever having to work'. In other words- typical fiscal conservative idiocy.
You can't get any kind of financial house in order without a combination of reduced spending AND increased income. This means increased taxes, Especially on the wealthy. During the Eisenhower administration, the top wealthiest payed a 90% tax rate, they still got richer, and the nation flourished. Now its around 47%. If the wealthy really think that this nation is going to dramatically reduce a $14.6 Trillion debt by gutting Medicare, Social Security and other social programs to the bone while they can keep their millions and billions to play with in the markets, they are severely warped in the mind.
Now onto some key points in the Opinion (in blue font):
"The policies of the Obama administration have led to the weak condition of the American economy. Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment. The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline.... The data for May are beginning to arrive and are even worse than April's. They are marked by a collapse in payroll-employment gains; a higher unemployment rate; manufacturers' reports of slower orders and production; weak chain-store sales; and a sharp drop in consumer confidence."
Personally I agree with this contention, however I differ completely as to the question of 'Why', as in Why has the Obama administration been so awful in fixing the economy?. Feldstein and others like him will say its because Obama is too liberal or a Socialist, or he's anti-Wall St. This is complete utter BS. Perhaps Presidential candidate Obama was those things, but President Obama? No, sorry-- those 'talking points' lies don't cut it any longer.
Truth is Obama's economic policies, much like his military policies are pretty much exactly like George W. Bush. See candidate Obama had a economics team which helped him to shape and craft a very liberal, populist message as to how to fix the economy. Then immediately after election, Obama fired ALL of them and replaced his team with Wall St cronies of Bill Clinton and the policy direction shifted.
Obama's policies have been Reaganesque-- trickle down economics, pumping money into the markets to create artificial investment bubbles, every industry from automotive to financials made 'too big to fail', not a single piece of legislation to benefit the middle class or the poor... In addition, the Bush tax cuts were extended to even the filthiest rich, fiscal conservative Ben Bernanke was re-nominated by Obama, and not a single person of importance has been tried and convicted, or even arrested in connection to the 2008 crash.
"How has the Obama administration contributed to this failure to achieve a robust and sustainable recovery? The administration's most obvious failure was its misguided fiscal policies: the cash-for-clunkers subsidy for car buyers, the tax credit for first-time home buyers, and the $830 billion "stimulus" package. Cash-for-clunkers gave a temporary boost to motor-vehicle production but had no lasting impact on the economy. The home-buyer credit stimulated the demand for homes only temporarily."
While I disagreed with "Cash for Clunkers" because of the rigid guidelines of purchasing new vehicles only while having to own the car you were turning in for at least a year, it did serve its purpose; a purpose very few ever knew about.
Around the time of "Clunkers", the US owed China a payment on our debts but the Chinese were feeling very nervous about taking US greenbacks so they wanted something else instead as a 'currency'-- China needed scrap metal... lots of it. China was/is rapidly expanding particularly inland and needed the metal badly, so it was devised that the US govt would 'buy' the clunker automobiles from each person at $4k each, destroy the engines so they could never run again, then crush the vehicles into scrap metal which was sent in bulk over to China at an agreed upon price per cubic ton in lieu of cash payment. And in the interim, it would be a temporary 'stimulus' to local car dealers.
Pretty clever of Obama, yes?
Feldstein goes on to criticize Obama for not spending enough on stimulus which takes some nerve considering fiscal conservatives want the government to spend as little as possible and be out of the affairs of the private sector, yet here he is bitching that Obama didn't spend enough. Can't have your cake and eat it too.. So we skip forward to one other point he makes worth commenting on...
"The administration (has a) incoherent position on the international value of the dollar. The Treasury repeats the slogan that "a strong dollar is good for America" while watching the real value of the dollar fall by 7% over the past year, and while urging the Chinese to allow the dollar to fall more quickly relative to the yuan. The lack of a consistent dollar policy adds to the uncertainty that limits business investment and hiring."
This point I agree with as well, but how much is the fault of Obama vs the overall US policy of doing economic business with China which has been in place at least a decade. President Bush was afraid to outwardly state China is a currency manipulator and President Obama is as well. Now candidate Obama had no problem saying it repeatedly. Neither did Teasury sec. 'nominee' Timothy Geithner before he was sworn in, then clammed up on the subject. They thought they could nudge China gently towards a more fair currency policy... Oopsie, guess not.
The US wants fairer dollar to yuan rates, yet has no leverage to get its way since China is the US' largest creditor and owns the vast majority of US Treasuries. Every time we devalue the dollar, China devalues its currency just as fast to maintain its 6 to 1 ratio, and like mentioned before, who's going to stop China? What cards do the US really hold? And even in a perfect world where the currencies were equal, while it may help greedy investors and corporations make money, it does not translate to increased hiring domestically. It just means more money to expand operations abroad or hire American temps who work for less than salaried workers.
~ As I mentioned, you can click the link below to read the WSJ opinion in its entirety.
http://online.wsj.com/article/SB10001424052702303657404576363984173620692.html?mod=WSJ_hp_mostpop_read
The big irony of this whole debate on the state of the US economy is the more Obama acts like a fiscal conservative, the more Democrats feel betrayed and afraid to speak up, the more Republicans resent him and spread lies that he's an extremist, and the Worse this economy gets. '
Maybe its about time President Obama look into the mirror and rediscover 'Candidate Obama'... "Come out, Come Out wherever you are!"
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