The Opposition Response

-By Dan Scott

Barack Obama gave his press conference outlining his general plans, which include everything from a stimulus package to extending unemployment benefits to bailouts for virtually everyone and their brother, along with other Democrat priorities. He called for quick action by the lame-duck Congress to implement these plans before he even takes office. The GOP seems to be either still in shock or simply mesmerized by the imperative of we must do something so let’s go along otherwise we will get blamed for being bipartisan or not being relevant. The lack of response is to say the least is shocking and reflects either incompetence on their part or a lack of courage by simply laying low to see what shakes out. Since Obama is bound and determined to follow the Democrat path of redistribution of wealth instead of wealth creation to solve the current economic crisis, and the GOP it seems is willing to shirk it’s responsibility as the opposition party, we as conservatives will give the response instead.

First off, an analogy will be helpful in helping describe what the proper response is to get the economy out of the current tailspin. When a pilot loses control of a nose diving plane that goes into spiral, the intuitive response of a novice pilot is to grab hold of the controls and fight the spin to regain control of the plane. This is precisely the wrong thing to do, the proper response is either to steer in the direction of the spin or to let go of the controls and the plane will right itself by doing exactly the opposite motion that a pilot would direct it. This same principle of recovering from a spin also holds for a car by turning in the direction of it and not applying brakes.

Using the government to expend funds in an attempt to mitigate or reverse an economic tailspin only prolongs the situation or makes it worse. The reason quite simply is the diversion of resources from investment in the private sector by government to handing out money in the form of bailouts, construction projects and unemployment benefits. Diverting money from wealth creation to wealth re-distribution is the wrong action to take. Government spending does not create wealth, it only re-distributes it. The current economic problem is one of insufficient wealth creation. Whether the government borrows the money or confiscates it via taxation, it inevitably takes money from the private sector. In the modern economy, the private sector is the only economic activity that actually creates wealth. Why is that? Basic economics, every time a profit or interest is charged, wealth is created. John Maynard Keynes had a term for money that was created by banks via interest, he called it Bank Money. The role of the Federal Reserve is to maintain the growth of the money supply to keep pace with wealth creation by the private sector. Generally, too much money is inflationary, too little money recessionary. The role of taxation according to Keynes is to act as a brake upon the economy to keep it from overheating into inflation. The purpose of money in the modern economy is to facilitate the trade, it is a place holder of convenience that allows orderly trading. The dollar is the infrastructure of our economy and therefore a necessary government function. The government however, should not dictate the details of the trade, nor should it put the cart before the horse by printing money.

In order to solve the current economic problem we have to determine what brought this about. In short, government recessionary policies caused money to be withdrawn from the US domestic economy at a continuously expanding rate that past a tipping point in the ability of the economy to keep growing. Once that growth was interrupted, the economy started to into a downward tailspin. Normally such an economic tailspin would level off once supply and demand come back into balance. In this case, the high price of energy rippled through the economy causing employers to lay off workers in order to trim costs and then were finally forced to pass on those costs once all cost cutting measures failed, causing inflation. However, this economic slowdown is different since even though the price of oil and gasoline has dropped back to 2005 levels thus causing gasoline consumption to start recovering, unemployment continues to increase. The source of this monetary withdrawal from the domestic economy is the outsourcing of our energy to foreign countries. Every year hundreds of billions of dollars are withdrawn from the domestic economy under the failed government policy of the domestic drilling ban. While the ban has technically expired, because of Congressional control over the Bureau of Land Management who is responsible for leasing land, that ban is still functionally in effect.

The proper solution to the current economic crisis is for the government to stop meddling in the nation’s energy supply. The percentage of foreign oil coming into the country has been increasing for 30 years. The government should not be co-opting decisions that are rightfully made between energy suppliers and consumers. The purpose of government is to facilitate private enterprise not direct or control it. When the government builds and maintains roads, it facilitates commerce and private travel, not decide what form of energy the vehicle uses. When the government hires police, it is to facilitate an orderly society not micromanage the comings and goings of the average person. The solution is to remove the disincentives for domestic drilling whether they be politically correct limiting of drilling locations or excessive taxation. Whether you believe in AGW or not, outsourcing of the nation’s energy supply does not in anyway contribute to using LESS oil unless you consider a recession as a legitimate means of reducing consumption. The facts are clear on this, oil consumption has been rising steadily more or less in proportion to population increase as indicated by per capita energy consumption being essentially flat since the 1980s, this is an undeniable fact.

When the energy companies start drilling domestically, thousands of high paying jobs will be created immediately along with purchase orders for material and equipment. Once domestic drilling starts producing oil and natural gas within the US, every barrel of oil and cubic foot of gas not imported is money not siphoned out of the domestic economy. Contrary to the liberal spin, it will not take 10 years for the oil to flow, typically it takes one year for a well to be brought into production. California has half of the known US offshore oil reserves, so why should California be asking for a bailout when they could negotiate with the oil companies like Governor Sarah Palin of Alaska did for a royalty payment? Ending government meddling in the energy sector will cease the need for bailing out the automakers and costing the taxpayers money.

The other failed government policy contributing to the economic downturn was the Community Reinvestment Act (CRA), a euphemistically named law that forced large banks to make unsound loans to people who were unlikely to keep their jobs in an economic downturn. People in these economic circumstances shouldn’t be owning homes, they should be renting to allow the maximum flexibility in how they can adapt to their economic realities. The answer is not bailout of homeowners or banks, that is a paper shuffle which diverts much needed capital for business investment. The answer is to do nothing, repeal the CRA, all of it’s follow up legislation and allow those who shouldn’t be owning a home to default and relocate to their proper housing accommodation, i.e. an apartment. Unless this is done, banks can not and will not being making new home loans to anyone since any government legislation that mandates unsound lending practices which ends up forcing the write down of principal and interest will dissuade any loans for fear of losing money. Banks are not in the business of losing money, depositors money, our money! Bailouts to deal with the consequences of a failed government housing policy costs the taxpayer money, ending government meddling in the housing market does not.

Barack Obama has indicated repeatedly that he will not require illegal aliens to leave the country, on the contrary he intends to make it easier for them to stay by encouraging states to issue them driver’s licenses. With ten million people out of work, how can Barack Obama justify literally millions of illegal aliens working jobs that are needed by US citizens? Literally billions of dollars in government benefits are being expended to mitigate the economic circumstance of US citizens just so illegal aliens can stay in this country without our express permission. Billions of dollars of diverted resources taken from the private sector in the form of taxes. In a complementary policy of condoning the presence of illegal aliens, he now speaks of extending unemployment benefits for those it is soon to expire. How is this reasonable? Aside from the failed policy of condoning illegal immigration, extending unemployment benefits distorts the labor market. Why should those unemployed in El Centro CA experiencing over 24% unemployment continue to stay in an area that clearly there are and have been insufficient jobs? Too many people searching after the same job depresses wages, and when wages are depressed down to the minimum wage cut off, employers are forced to layoff workers to cut expenses. While creating more jobs would seem to be the solution, current government taxation policy robs businesses of investment capital and high energy prices just raises the price of everything discouraging hiring. Relocation by people who are unemployed and renting is a win/win situation for everyone including those who remain behind. Approximately one sixth of the country’s metropolitan areas have unemployment of 4% or LESS! Encouraging people to stay in a geographic area by extending unemployment benefits discourages people from taking initiative and personal responsibility. Relocation costs the taxpayer nothing, extending unemployment benefits do.

President Bush at this point should not sign any legislation that does not end the government’s meddling in the nation’s energy supply or the home mortgage market. To do so is to legitimize failure and allow it to happen again. Barack Obama should do his own dirty work, he has to take personal responsibility for all consequences of any action he proposes. On the contrary, Congress should start first by pointing the finger at themselves and profusely apologize to the nation and the world for their incompetence in attempting to centrally plan and control the economy. Congress needs to hold those accountable for not preventing the meltdown. This accountability should start with Charles Schumer who was personally responsible for causing the bank run on IndyMac. This was the first domino to start all the other dominos falling costing the taxpayers of this country over $700 billion so far. Rep. Barney Frank and Sen. Christopher Dodd are currently running sham hearings at their respective ends of Congress in an attempt to find scapegoats to cover up their personal responsibility for blocking reforms of Fannie Mae and Freddie Mac as late as 2006. President elect Obama has no business bringing Rahm Emanuel into his Administration since he served on the board of Freddie Mac and was one of the principles running this corrupt quasi-government agency at the center of the mortgage meltdown. The solution to our economic problems is not more government actions to cover up incompetence by its officials. Problems are solved by taking personal responsibility for the consequences of your actions, failing that the objectivity required does not exist.
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Dan Scott calls himself a “Member of the Global Capitalist Cabal preaching Capitalism and personal responsibility as the economic solution to world poverty.” He is also a member of the 14th Amendment Society — victimhood is a liberal code word for denying the civil rights of others. He is also a proud member of the Global Warming Denier Cabal, insisting that facts not agendas determine the truth.

Dan can be seen on the web at http://www.geocities.com/fightbigotry2002/ as well as http://www.geocities.com/dscott8186/saidwebpage.htm, And can be reached for comments at dscott8186@yahoo.com.