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WORD COUNT
664
JUNE 17, 2009
OBAMA HAS
SLOWED THE ECONOMIC BLEEDING – by Donald Kaul
There was
a headline in “The New York Times” the other day that illustrates the
kind of Catch 22 economy we’re in. “Rising Gas Prices Threaten to Slow a
Recovery,” it said.
Bad news,
right? We don’t want the economy to slow down any more than it’s already
slowed.
On the
other hand, we are basing our hopes for saving our collapsing car
industry on a universal switch to cleaner cars that get better gas
mileage. We also want to stimulate mass transit in our cities in order
to get people out of cars entirely. (I won’t mention global warming
because it drives a lot of people crazy.)
But to
achieve those things, we have to have higher, not lower, gas and energy
prices. People will not give up their big, honking cars and trucks in
favor of matchboxes on wheels; even less will they walk to their corner
bus stop, unless they can’t afford to do otherwise. On this I will stake
my reputation as a soothsayer.
The sad
truth is that we will continue to be at the mercy of oil producers so
long as we are unwilling to go through the painful transition to a
society that does not see the auto as a necessity for work, play, status
and raising children. And the even sadder truth is that the pain of the
transition to green transportation (widespread unemployment, a spike in
the suicide rate, higher taxes, walking) may be more than the American
people can bear.
The
problem is so vexing that even a wise Latina woman would have trouble
figuring it out. But that’s not the only problem facing Mr. Obama and
Capitol Hill’s Gang That Couldn’t Talk Straight.
You may
not have noticed but the economy fell off a cliff last fall. One minute
prosperity was there beside us, laughing and talking, telling jokes; the
next it was gone---disappeared.
When we
looked over the side of the cliff we were walking on, there it was,
tumbling toward the bottomless abyss, a fate so terrible that we only
refer to it as “the D word.”
That was
the situation Obama inherited when he took office and he did what he had
to do. He began to pump vast sums into the economy, financing it by
borrowing vast sums from the Treasury who in turn borrowed it from
China, Japan, Middle Eastern potentates and other global loan sharks.
To do
otherwise would have risked economic collapse and the most dreaded of
economic calamities, deflation. (An economy in the throes of inflation
is in trouble; an economy in the throes of deflation is dead.)
The last
time I looked, the president’s plan seemed to be working. Prosperity has
stopped tumbling and is now merely rolling slowly toward the abyss. We
are hopeful---optimistic even---that it will soon stop rolling and begin
the long climb back to us.
But, you
cannot keep borrowing vast sums indefinitely. Eventually the economy
reignites, wages and prices go up and inflation rears its ugly head. Not
so bad as deflation, perhaps, but bad. The way to stop inflation is to
raise interest rates and taxes, which risks sending the economy back
into recession, putting people out of work, including politicians who
voted to raise taxes.
The
solution of these problems has not been made easier by the fact that the
Republican Party has yet to lift a hand to help. Its alternative
solution has been simply “spend less” (although it’s vague about the
details and, in any case, is exactly the wrong thing to do).
The other
day Rush Limbaugh, the leader of the Republican Party in all but name,
expressed sympathy for a boycott of General Motors because it’s going to
be partially owned by American taxpayers. Socialism, don’t you know.
“Nobody wants to support an Obama company,” he said. “They don’t want to
do anything to make Obama’s policies work.”
This
country doesn’t need a third party; it needs a second one.
--
Don Kaul
is a two-time Pulitzer Prize-losing Washington correspondent who, by his
own account, is right more than he's wrong. Email:
dkaul2@earthlink.net -- A photo of Donald Kaul is available
CLICK HERE
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