Obama Problems

Obama wrote an op-ed in the Washington Post defending the stimulus.

Here's my beef with the stimulus and much of the other things Obama said during the campaign and continues to say. I agree with his broad, unspecific rhetoric. Because there isn't much to disagree with. Sure, I think investing in energy independence and fixing healthcare are great ideas. And sure, I think getting people back to work and the stock market up again are good ideas. Who doesn't? I guess what I'm not convinced of is two things: 1) What is the specific goal of the stimulus? and 2) Will it work?

What I'm skeptical about is the stimulus' ability to serve multiple purposes - get people back to work, prevent the economy from collapsing, invest in our future, and to do all of this without substantial blowback. I'm not a Republican partisan questioning the stimulus for political or ideological reasons. I don't think prescribing only tax cuts will work. I don't secretly hope for failure so Bobby Jindel or Salih Palin will be president in 2012. I understand macroeconomic theory and how the government is supposed to spend and cut taxes to stimulate growth. I get it. I also get it will be imperfect and pork could be required to get it passed. That isn't my concern. My concern is we got into this crisis because of excessive debt spending in the private sector and we expect to get out of it by transferring the downside risk to the taxpayer. My concern is that we've already bailed out banks, insurance companies, and car companies and that by rewarding failure we create more incentives for unnecessary future risk. My concern is that the mass psychology that two years ago got lenders to lend money to buyers who couldn't afford houses is now in a mass panic about going into long term mega debt that I'm eventually going to pay back via future income tax and property tax. Worse, I'm even more worried about inflation rearing it's ugly head as a result of 800 billion dollars of new money going into print. I'm worried because I'm in an industry where the paycheck isn't steady, so it requires a lot of fiscal discipline to stay in it for the long term and that goofy fluctuations in the stock market or with inflation can completely ruin responsible long term financial planning.

Economists and Historians still debate what got us out of the Great Depression. Was it the New Deal or WW2? I don't think anyone knows for sure. But this situation reminds me of the time my friend and I were in Cuba and we were running low on money. You can only use American cash in Cuba because credit card companies can't operate. I brought more more and was generally a bit more careful. Sure enough, by the end of the trip, we were low and in a bit of a panic. He thought the best thing to do was pool our money together to finish up the trip. (I had more). Needless to say, I didn't agree.

Basically, industries who are doing poorly are asking industries and individuals who are doing less poor to help them out. They argue, it's better to help them because the if we don't, it'll get worse. And my friend could make the same argument. It would be bad for me if he ran out of money as well. In the end, and in order to be safe, my parents forwarded us $300 via Western Union. It was embarrassing, but not the end of the world. We paid them back (I think). But the issue there was access to money, not the lack of it. A more appropriate analogy would be that my friend are I were in Cuba traveling while already in credit card debt. In order to get out, we needed to borrow against our credit card and then figure out a future way to pay it back. I guess what I hear from Obama is that we need to borrow against the credit card, without any plan for how we're going to pay it back.

But it's hard to have strong feelings one way or the other on the economy and the government's role. I just would like to know where the 80 bil from last fall went and whether it solved the problem it was supposed to solve. And what happens if the bill doesn't have the desired effect? Then what do we do? I have no frame of reference here. Are we betting the rent money on this thing? Or are we making a smart, logical, double down bet on a ten with the dealer showing a six? I just don't know.

But my other beef with Obama is his WOT rhetoric. He sold the story during the election that Iraq was the dumb war and Afghanistan was the smart war and failures in Afghanistan were due to over emphasizing Iraq. So now the idea is to pull out troops from Iraq and devote them to Afghanistan. Now this analysis makes perfect logical sense. If written for a college essay, it would probably get an A. The problem, I think, is that it is totally wrong. Empires die in Afghanistan. The country is basically illiterate. What do we - in the best case scenario - expect this country to be? How does sending more troops lead to this goal? Is our goal merely to kill/capture Bin Laden and AQ's top leadership or to decimate the Taliban? Can we achieve this? Can we achieve it with the number of proposed troops? Is it worth 10,000 American lives to capture/kill Bin Laden at this point in time?

And yes, spending money on improving the healthcare system and updating our infrastructure and energy independence is needed. But is now the best time to do it? I mean, I know I'll need a new car at some point. But if I have a big credit card bill is it wise to purchase the car now? Or should I wait to pay the credit card and then buy the car? These are the type of questions I don't feel like I have the answers to. And I maybe no one else does either.