Reverend Peter Marshall's Commentary Archive

". . .Why do you not know how to interpret the present time?" (Luke 12:56)  

     Most U.S. Presidents have a six-month "honeymoon" period before the bad news and criticism starts getting thrown at them. Obama had less than a month.

Our 44^th President sailed into Washington on promises that his administration was not going to be characterized by politics as usual. He was going to do business differently, and get everybody on the same bi-partisan page. Yeah, right. We've heard all that before, folks.

Sure enough, it has turned out to be not only business as usual with the Obama crowd, but the same old business even worse than before. Item: He can't even fill up all his cabinet positions, because he can't find enough Democrats that are clean morally. The list of those with serious ethics problems now includes Bill Richardson (declined his nomination), Hillary Clinton (Sec. of State), Eric Holder (the Attorney General who, incidentally, yesterday called Americans "cowards"), Rahm Emanuel (Obama's Chief of Staff), Tim Geithner (Sec. of the Treasury), and former Senator Tom Daschle. The last two failed to pay their taxes correctly. So, now we have a guy who is Secretary of the U.S. Treasury who can't even handle his own income taxes properly. And these are the people that we expect to solve our nation's financial mess? So much for the moral high ground! 

And now the foreign challenges are beginning to be thrown through the White House windows. Iran just launched a satellite into space, and the Obama Administration made no response. According to a high-ranking U.S. Defense official, North Korea has plans to again test its Taepodong 2 inter-continental ballistic missile within the next three weeks. Duly taking note of our silence over Iran's launching, North Korea is undoubtedly doing this partly to test Obama. How will he respond? We shall see, but you can bet there will be other challenges forthcoming.

One of the few positive notes from the new administration is Obama's recent announcement (perhaps aimed mostly at Nancy Pelosi and the leftist carnivores in the House) that in light of the huge financial crisis it would not be a good idea to re-introduce the Fairness Doctrine in Congress. I hope he realizes that if they do attempt to revive that muzzle on free media speech, it will ignite a firestorm of protest unlike anything that he has ever seen. So, perhaps he is smart enough to let that sleeping dog lie. 

Meanwhile, the President just signed a $787 billion (that's with a "b"!) Stimulus Bill, authorizing more money to be spent by the Federal Government than it has ever committed to spend at one time throughout our entire history. There is no precedent for it. It is mind-boggling in its immensity, and truly frightening in its potential to spend the nation into financial oblivion. If the government ends up spending all of this, it will equal the entire amount of dollars presently in circulation. We are literally doubling our currency (the U.S. Treasury is feverishly running the printing presses) and thereby halving its value. Because we are no longer on the gold standard, our greenbacks are literally backed with nothing. Their value is relative to other currencies, created by the trust put in them by other nations, particularly the Chinese, who already hold over a trillion dollars in U.S. Securities. Until the present financial meltdown, the Chinese were holding up our finances with their security purchases - and thereby putting us tremendously in their debt, of course. But, due to their own economic depression the Chinese have infused over $500 billion into their own economy, so they are purchasing considerably fewer U.S. Treasury securities. If they buy less of our debt, then we get stuck with more of it. 

And the problem is that the current stated debt of the Federal Government is $1.2 trillion, even without the $787 billion Stimulus Bill. And worse, hidden but nonetheless real debt actually pushes the figure north of $12 trillion!! So, the President has everybody focused on the crisis in the center of the room - the financial meltdown of some of our largest banks and our mortgage institutions. But, the huge elephant lurking in the corner is the Federal debt. It is completely out of control, to the extent that if something drastic is not done to cut it back down to manageable size, on its present growth curve the interest payments alone will amount to one half of the entire Federal budget! In other words, we are headed for complete fiscal disaster. 

Remember, there are only three solutions to Federal debt: raise taxes, cut spending, or print money. The last several administrations have decided against both raising taxes (Republicans) and cutting spending (both Republicans and Democrats), so they have resorted to printing money. This, of course, leads to rampant inflation and the devaluing of the currency. All one has to do is to consider Zimbabwe for the latest example of what runaway inflation looks like. 

The only way out of this mess is to cut Federal spending severely, and put the government on a very strict diet to lose weight. But where will we find a President, Senators, and Representatives with the moral courage to call the American people to make the needed present sacrifices, so that our children will not have to live in ruin?

I am convinced that eventually Obama is going to start talking about raising taxes, and perhaps he may make some noises about cutting Federal spending - though this last is suicidal for Democrat politicians, since their constituents are addicted to the Welfare State. It may not be this year, or even next year, but I'm sure it's coming. However, he may also cynically rely on the knowledge that Congress is much more likely to raise taxes than cut spending, especially given the overwhelming Democrat majorities. I can just picture him standing there in the Oval Office, palms upturned, shrugging his shoulders and saying to the nation: "I have great sympathies with the agonies of having to pay higher taxes, but we really don't have any choice." I hope with all my heart that he and the Congress will find the moral courage to severely cut back Federal spending and the size of the Federal Government, but I just don't see that happening with the Current Occupant or the Congress.

In my view, the only way this is going to happen is for America to go through such financial pain that a grass-roots conservative Stop Federal Spending movement, led by a Reagan-type conservative with his kind of moral courage, sweeps through the country. In order for this to succeed, though, Americans are going to have to experience a grass roots wave of repentance about our being all too happy to take government money. Until a moral and spiritual revival sweeps through the country, and ushers in a resurgence of responsibility to live within our own means on personal levels, we will never muster the political will to demand it of Washington. 

In the meantime, there is no historical precedent that tells us this stimulus package is going to jump-start the economy back to health. During the past year, the government has already spent $7 trillion in bailouts and various stimulus programs, and it hasn't done any discernible good whatsoever. Things keep getting worse.

Now, he's signed into law the authorization to spend $787 billion more. And in spite of the Republicans having managed to get some of the horrible pork out of the bill, there is more than enough left in. Item: Billions of dollars to ACORN, that ghastly community- organizing group for which Obama taught, which is one of his favorite groups. They are already under Federal investigation for voter fraud in thirteen states. Then there is the $6 billion for colleges and universities, many of which already have billion-dollar endowments. There is $88.6 million for new school construction in Milwaukee. But according to the Milwaukee Journal Sentinel, the city's public schools have shrinking enrollment, 15 vacant schools, and no plans whatsoever for new school construction. Florida citrus and California wine growers are fighting to get a windfall from a new "bonus depreciation" in the bill. The list goes on and on. This is simply Federal spending on steroids.

Not to mention the fact that much of this huge amount of money will not even effect the economy until 2011 and beyond, about the time that, left to their own devices, market forces might begin to work a turn-around.

The President wants us to believe that the billions of dollars in the stimulus package that will be spent on infrastructure (bridge repair, new roads, mass transit, airport upgrades, etc.) will create employment and help pull the country out of the economic doldrums. And he likes to compare himself to FDR, whom most historians have tended to credit with pulling the country out of the Great Depression in the 1930's. That is, until recently.

Lately, rather incontrovertible evidence has emerged that it was not until the economy got onto a war footing in 1940 that employment began to rise strongly. Two UCLA economists have written in a new study that FDR's New Deal policies actually prolonged the depression for seven years. The anti-competition and pro-labor policies that Roosevelt signed into law in June, 1933 allowed wages in eleven key industries to average 25% higher than they would otherwise have been. But, unemployment was also 25% higher than it should have been, given the rise in productivity that had occurred. By artificially raising both salaries and prices, FDR interfered with the market's self-correcting process. Without his policies, Harold Cole and Lee Ohanian conclude that the Depression would have ended in 1936 instead of the year it actually ended, 1943. "The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," noted Cole. (And, of course, the Keynesian economic theories that became popular as a result of this are precisely what Obama is relying on for his current thinking). "Ironically," Cole states, "our work shows that the recovery would have been very rapid had the government not intervened."

FDR's Federal programs did not lower unemployment. The Works Progress Administration built roads, the Tennessee Valley Authority build dams, and the Civilian Conservation Corps planted trees. But, as historian Burt Folsom reminds us, "every dollar that went to creating a Federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors." The Agricultural Adjustment Administration paid farmers not to produce on their land. As the farmers took the money and let the acreage lie fallow, the nation developed shortages of corn, wheat, and cotton. By 1935, as absurd as it sounds, the United States was actually importing almost 35 million bushels of corn, 13 million bushels of wheat, and 36 million pounds of cotton.

That same year, Roosevelt raised taxes to pay for all these Federal programs. The marginal tax rate on top incomes was raised to 79 %, and later to 90%. This discouraged investors and prolonged the Depression. FDR's Secretary of the Treasury, Henry Morgenthau, finally had had enough of double-digit unemployment, actually made worse by Federal programs. In 1939, he said "We have tried spending money. We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises . . . . I say after eight years of this Administration we have just as much unemployment as when we started . . . . And an enormous debt to boot." 

I fear that will become true of the current Administration in far less than eight years!

And the payouts from Roosevelt's Federal spending were uneven, influenced by lobbying, just as has been true in the bill Obama signed. Those with more effective political lobbying won greater subsidies than those who may have had greater need and better causes but no lobbying power. For example, the silver miners, championed by Senator Key Pittman of Nevada, won a subsidy of almost $300,000 per day for 14 years, but the coal miners got nothing.

Folks, this $787 Stimulus Bill is déjà vu - this is the 1930's all over again, only worse, much worse. This time, we really could end up with a Federal deficit from which we would never recover. God forbid. And the good sense of the American people (yes, I still think there is plenty of that out there in the plains of Kansas and the hills of Pennsylvania and other places) forbid.

But what is going on here is rampant socialism, exemplified by Obama's very revealing remark to Joe the Plumber during the election campaign: "When you spread the wealth around, it's good for everybody." Oh, no it's not!  Because the way that's done is by using government power to first confiscate hard-earned income from those who have a right to keep the fruit of their labors. (Not to mention that they will invariably re-invest it in new job creation). What Obama was espousing to Joe is pure Marxism. And tragically, a Rasmussen survey found that 44% of the voters agreed with Obama (69 % of Democrats, which figures - the Marxists are all Democrats); only 42% objected to his philosophy. That's scary, although I want to believe that if that 44% had Obama's remark carefully explained to them many of them would retract their agreement.

The bottom line these days is not about economic depression or a financial meltdown - it's about government control of our lives. In 1964, Ronald Reagan quoted Senator Joe Clark (PA) as saying that liberalism was "meeting the material needs of the masses through the full power of centralized government." And Reagan went on to state that " 'the full power of centralized government' was the very thing the Founding Fathers sought to minimize . . . A government can't control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose." Exactly. And it does that through taxation and regulation.

How many times have we heard in the last six months that the mortgage mess was due to a lack of government regulation over the mortgage industry? Wrong. Just the opposite. The mortgage mess happened because the Federal
Government, particularly Barney Frank's House Finance Committee, the Congressional Black Caucus, Senator Chris Dodds and others, repeatedly pushed the semi-private Freddie Mac and Fanny Mae to guarantee loans to people that had no business receiving them.

 Government control is the real culprit here, not the lack of it.

 In his "Rendezvous with Destiny" speech 44 years ago Reagan spoke words that every American needs to hear today:         

          "If we lose freedom here, there is no place to escape to. This is the last stand on earth. . . . This is the issue . . . . (w)hether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves. . . . You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the last step into a thousand years of darkness."

 Amen.

Copyright, 2009, Peter J. Marshall. All rights reserved.

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