Obama + stimulus plan = severe recession

Today the stock markets were shook up again with the bad economic news. Even though everyone knows what the headlines are going to be, many investors act surprised and seemed to sell off in a panic.

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If you don’t have the money or credit, then you just can’t spend what you don’t have.

The stock markets reversed on Obama’s speech of change and that the recession will be long an difficult. That is weird to hear considering when he was campaigning he spoke as if he knew how to fix the economy, no different than the way Senator McCain claimed. In all fairness, Obama isn’t physically in office yet, but his plans are being laid out.

From what I have read, I have grave concerns that he unfortunately doesn’t have the answers to fix the economy. Is that surprising? Not really. I believe all politicians make promises they can’t keep in order to get into office and Obama is no exception. I doubt it wouldn’t be any different if McCain were elected.

NYTimes:

Senate Democrats complained that major components of his plan were not bold enough and urged more focus on creating jobs and rebuilding the nation’s energy infrastructure rather than cutting taxes.

Just hours earlier, Mr. Obama called for speedy passage of the stimulus measure, warning that the recession “could linger for years” if Congress did not pass his plan within weeks.

Further complicating the picture, Democratic senators said Thursday that they would try to attach legislation to the package that would allow bankruptcy courts to modify home loans, a move Republicans have opposed.

Mr. Obama has been assembling a package worth as much as $775 billion over two years to revive the sagging economy, using the plan to define his presidency even before it begins and to foreshadow his broader approach to governing.

While relying on traditionally liberal notions of using government spending to spur growth, he has also tried to adapt it for a new era with investment in clean energy and technology. And he is trying to balance all of that with tax breaks that appeal to Republicans.

But the broad support he has enjoyed so far for the basic concept is now being tested as the specifics become clearer. While conservatives criticize the high spending, and moderate Democrats express concern about the swelling deficit, liberals are pushing for even more money devoted to social programs, alternative-energy development and road, bridge and school construction.

To be candid, his stimulus package mostly consists of giving refunds and tax credits. It is still based on the trickle down effect theory. Give people money to spend and they will stimulate the economy indirectly. Unfortunately, he criticizes President Bush for the financial mess he got us into, yet Obama is literally taking the same actions. President Bush gave stimulus checks last year. Obama wants to do the same. Bush gave tax cuts early on that are soon to expire. Obama wants to do the same and draft even more tax cuts. Obama also wants to give tax credits to companies if they don’t lay off current employees or higher more people. He talks of change, yet all I actually hear is more of the same.

ABC News:

President-elect Barack Obama’s proposed tax cuts ran into opposition Thursday from senators in his own party who said they wouldn’t do much to stimulate the economy or create jobs. Senators from both parties agreed that Congress should do something to stimulate the economy. But Democratic senators emerging from a private meeting of the Senate Finance Committee criticized business and individual tax cuts in Obama’s stimulus plan.

They were especially critical of a proposed $3,000 tax credit for companies that hire or retrain workers.

One tax provision would provide a $500 tax cut for most workers and $1,000 for couples, at a cost of about $140 billion to $150 billion over two years. The individual tax cuts may be awarded through withholding less from worker paychecks, effectively making them about $10 to $20 larger each week.

Sen. Ron Wyden, D-Ore., said he doubted that a modest tax cut would change consumers’ spending habits.

“In tough times people don’t respond all that well to marginal changes, such as a small amount of money added per paycheck,” Wyden said.

None of these ideas are new nor will they fix the economy. The recession we are in will become more severe than when Bush was President because it actually follows the same pattern, but Obama’s “new” plans are being launched on an already weakened economy. When Bush initiated similar plans, the economy was on more solid footing as compared to today.

I have been one of the biggest critics of Bush and his financial gurus Bernanke and Paulson because they made bad decisions. Watching Obama outline his plan of “spending our way out of the recession” has a familiar ring from his predecessor (stimulus checks, tax cuts, and tax credits) in the same way Bush and his administration hoped these actions would produce jobs.

One last thing I don’t like to hear is the same irritating “threat” based on fears that if we don’t pass “this” “trillion dollar” stimulus package that the recession will linger for many years. I heard that same crap about the war in Iraq invasion as well as passing the Wall Street bailouts. I didn’t believe neither and I was RIGHT! That type of reasoning is phony and not based on facts. I hope most Americans at this point can no longer be scared into believing things that are not true.