During the recent Presidential Inauguration, Barack Obama used the same Bible that Abraham Lincoln used during his inauguration. Obama traveled from Illinois using the same route Lincoln did on his way to Washington. But there the similarity ends.
While Abraham Lincoln led our Nation during turbulent times and freed a nation from the grips of a slavery, Obama’s economic stimulus policies will enslave us and generations of Americans for decades to come.
In President Roosevelt’s inaugural address in March 1933, he told the Nation that "…the only thing we have to fear is fear itself". In the 21st Century, when given the opportunity, President Obama decided that scaring the daylights out of the nation to get his stimulus package passed was the prudent way to go. If he were still a senator, perhaps his exhortation would be reasonable. As President he needs to calm the nation. Markets are about psychology. His objective as senator is to pass a bill. His goal as President is to calm a Nation.
Comparing Obama to Franklin Roosevelt, on a cover of a national publication, sets a standard that would be difficult for any mere mortal to live up to in a lifetime let alone in just four years. However, it takes more than a cover to make a President.
When President Obama had the opportunity to take on executive pay, he put a $500,000 cap on cash compensation on banks taking the next round of stimulus funding. This populist approach may sound brilliant and it does play well to the anger of the masses. Unfortunately, the approach may deny troubled institutions the very talent they need during these troubled times. Why would a senior executive with talent take a position with a company in deep trouble with a salary cap when that same executive could go to another firm without such a limit?
Trying to interfere in free markets is, was, and always will be a disaster. Government can never respond as rapidly as a free market. Whatever controls government sets up, the free market system will find a way around it. A Senator can recommend interfering in markets. A President should not.
Complaints about how the TARP funds were spent are rampant. The President should understand that TARP funds were investments (preferred stock) and not spending. The significance is that the government expects to get repaid the funds invested. Forcing banks to make more troubled loans is insane which is what the populist cry is screaming. It is precisely the demand for credit availability to financially risky borrowers that put financial institutions in the bind that they are in today.
At the same time the recovery package is being debated, the effects of the original Emergency Economic Recovery Act are beginning to be felt. It takes about 6-9 months for a stimulus package to take hold in an economy. Unfortunately, our President wants to give us more of the immediate gratification that got us into this mess to begin with. A senator can play the "feel good" game but a President and leader must not.
The recovery package which has been "trimmed" to only $800 Billion or so, will merely successfully inflate our way out of the hangover of debt. If anyone remembers the 18% interest rates of the Carter days, wait a few years and you will have an opportunity to see rates headed towards that lofty plateau of years gone by. In a mere three years, bond holders will see their investments ravaged by the cancer of inflation.
Only when President Obama realizes that he is no longer a senator and is responsible for an entire nation and even the free world, will he realize the dangers of his reckless rhetoric and his reckless policies.
The slavery President Lincoln and our Nation fought so bravely to end is being brought back to us in the form of financial slavery for our children and our Nation. The only prudent measure for our Nation is fiscal discipline, personal responsibility, and guaranteeing our citizens the right to the pursuit of happiness. Keeping our children in debt that cannot be repaid except through rampant inflation is immoral. We are a better people than that!
Frank Ryan, CPA, Colonel, USMCR (ret) specializes in corporate restructuring and lectures on ethics and corporate governance for National and State CPA Associations. He is on the boards of numerous non-profit and publicly traded companies. He can be reached at [email protected]