The Obama Watch

He’s Playing You

Welcome to another edition of Obama's Fables.

By 7.14.10

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On June 30 in Racine, Wisconsin, at the kickoff of what has turned into Barack Obama's Socialism Victory Tour for Democrat candidates this fall, the President enlightened us with the following:

"You remember all the fear-mongering that was going on during the health care debate? All of you were told, you're going to lose your health care. It's going to be socialized. The government is going to come in and death panels are going to be set up and -- remember that? And now, we're about three, four months into it, and everybody is looking around and -- (laughter). But at the time -- at the time it was scary."

The Obamacare socialized medicine takeover legislation doesn't even go into effect until 2014, and he is saying now in 2010 just 3 or 4 months after its passage, hey, look around, where are all those scary results they told us about?

What I am wondering, actually, is just how stupid does he think we are? He is thinking that enough of us are too stupid to know that his socialized medicine bill doesn't go into effect until 2014, and that he can play us for fools with this kind of shameful, manipulative, abusive rhetoric. 

Brother Love's Traveling Salvation Show

The next week, President Obama took his stand-up comedy routine to Las Vegas, where he made an appearance on behalf of the lame duck Senate Majority Leader Harry Reid. Obama explained, "A lot of people in Washington forget where they came from. Harry remembers every single day." But after 24 years in Washington, Harry Reid long ago left his Nevada roots behind. He is now an East Coast socialist spear carrier for Barack Obama, dreaming of going down in history as the man who shepherded socialized medicine through the Senate, instead of listening to his Nevada constituents who overwhelmingly opposed the legislation.

As Senate Majority Leader, Harry Reid didn't just vote for the TARP bank bailouts. He led their passage in the Senate. He didn't just vote for the stimulus. He led its enactment in the Senate. He led the enactment as well of the Obama budgets with a runaway federal spending increase of 25% and federal welfare spending increase of one third in President Obama's first two years alone. He led enactment of the spending, budgets and deficits that CBO now projects will double the national debt in just four years by 2012 to $11.6 trillion, and quadruple it to $20.3 trillion by 2020, when the federal deficit under current Reid/Obama policies will still be over $1 trillion. CBO also reports that Reid/Obama federal budgeting increased out of control entitlement spending by $2 trillion over the next 10 years even before passage of Obamacare.

And what has Nevada gotten in return? The highest unemployment rate in America, at a depression level 14%, higher even than Michigan, which is suffering a long-term depression under its Harvard-trained Governor Jennifer Granholm. Also the highest rate of home foreclosures in America, and the highest rate of personal bankruptcies.

But President Obama's focus in Las Vegas was Harry Reid's opponent in this fall's elections, Tea Party and free-market advocate Sharron Angle. Offering another chapter for Aesop's Fables, a collection of fairy tale bedtime stories for children, Obama said regarding Angle, "She wants to phase out and privatize Social Security and Medicare. Phase out and privatize them."

But Harry Reid and Barack Obama have already done a pretty good job of phasing out and looting Medicare and Social Security themselves. The recently passed Obamacare legislation includes $2.9 trillion in Medicare cuts over the next 20 years, which is how Obama got his claim that the legislation would actually reduce the deficit. That $2.9 trillion comes mostly out of the payments to doctors and hospitals for the medical care they provide to seniors under Medicare.

As Dick Morris has explained so well, those draconian Medicare cuts would cause havoc and chaos in health care for seniors. Doctors, hospitals, surgeons, and specialists providing critical care to the elderly such as surgery for hip and knee replacements, sophisticated diagnostics through MRIs and CT scans, and even treatment for cancer and heart disease will shut down and disappear in much of the country, and others would stop serving Medicare patients. If the government is not going to pay, then seniors are not going to get the health services, treatment, and care they expect. Former House Speaker Newt Gingrich, now founder of the Center for Health Transformation, writes in his new book To Save America,

"Clearly, you cannot cut Medicare by more than half a trillion dollars [over the first 10 years] and not jeopardize seniors' access to care. Medicare access is already declining. The Mayo Clinic announced that on January 1, 2010, its Arizona facilities would stop seeing Medicare beneficiaries because the federal government does not pay the clinic enough to even cover its costs. According to Lynn Closway, spokeswoman for Mayo, the clinic lost $840 million in 2008 treating Medicare patients. And that's before the Democrats' half a trillion in cuts."

The remaining Medicare cuts in the Reid Obamacare legislation come out of Medicare Advantage, the option for private insurance coverage under Medicare which close to 25% of America's seniors, including many in Nevada, had already chosen as a better deal. The government's own Chief Actuary for Medicare has already estimated that more than 50% of seniors will lose their Medicare Advantage due to the Reid/Obamacare cuts in Medicare, despite President Obama's repeated insistence that under his Obamacare plan if you like your health insurance you can keep it (playing you again).

Meanwhile, Harry Reid has been in the forefront of the raid on the Social Security trust funds for 24 years now in the U.S. Senate (talk about time for a change). Every year in the Congressional leadership, Harry Reid has led the federal government to take any surplus left in Social Security to spend on other government programs, in return for government IOUs to the so-called trust fund. CBO has just reported that now the surpluses are gone, with Social Security in deficit this year for the first time since President Reagan saved the program in 1983. Social Security is now left with nothing but nearly $3 trillion in federal IOUs, with no cash or any other asset to back them up. That $3 trillion in the Social Security trust funds is yet another debt liability of the American taxpayers, which they will have to pay for again, in addition to their escalating payroll taxes, in order to continue payment of Social Security benefits for the next 25 years, when the supposed trust funds will run out completely.

Maybe the next time President Obama feels the urge to demagogue Social Security and Medicare, he should lie down until it passes.

President Obama's Grecian Formula Magical Elixer

But President Obama continued to enjoy himself in Las Vegas, a place he advised businesses not to waste their money going to last year, adding to the current depression there. After playing the entire country for years, promising a new era of bipartisanship and postpartisanship to get elected, he continued his scorched earth attack on Republicans, saying:

"And what the other side is offering is basically to go back to the same ideas that got us into this mess in the first place….They are peddling that same snake oil they have been peddling for years. They basically -- they spent a decade driving the economy into a ditch….This is a choice between the policies that led us into the mess, or the policies that are leading out of the mess." [Emphasis added.]

Well, let's see what got us into this mess in the first place. As explained by Stanford economics professor and monetary policy guru John Taylor in his book Getting Off Track, the housing bubble was stoked to toxic levels by irresponsibly loose Fed monetary policy during 2002-2006, when real interest rates were kept actually below zero for two and a half years. Real interest rates below zero are an outright subsidy for excessive risk, leveraging, and debt, actually paying financial firms to fall into that ditch. This was primarily a failure of the Bush Administration. Out of control monetary policy misleading investors, businesses, and financial firms has been identified by top economics scholars as the root cause of depressions, recessions and the business cycle for decades. Milton Friedman won his Nobel prize for his contribution to that work. Another Nobel prize winner, Friedrich Hayek, was a major contributor to this work as well. All of this is way over Barack Obama's head.

But the roots of the housing bubble and the financial crisis go back to the Clinton Administration, who with liberal Congressional Democrat allies like Barney Frank, gave birth to the subprime mortgage market as part of the liberal/left "affordable housing" policy. The Clinton Administration joined with the Obama allies at ACORN even back then to use the Community Reinvestment Act (CRA) to pressure banks to break down traditional mortgage lending standards. Clinton's Justice Department and HUD added to the bonfire with discrimination lawsuits against banks that were reluctant to go along. Fannie Mae and Freddie Mac got with the program to drop their standards as well to cycle trillions in subprime and substandard mortgage backed securities throughout the financial community in America and across the globe.

George Bush and the Republicans actually sought legislation to stop this developing danger and disgrace from 2002-2006. But they were shouted down by liberals including Barack Obama as racists who just didn't want minorities and the poor to enjoy home ownership. Barney Frank famously said at the time that he wanted to continue to roll the dice on these affordable housing policies, to the shame of his stupid constituents who keep voting for him. The federal government further contributed to the crisis through massively counterproductive mark to market accounting regulations, and regulations enshrining the top 3 credit rating agencies that christened the subprime mortgage backed securities as AAA.

These were the causes that "got us into this mess" -- more excessive, runaway, government foolishness -- not "Lehman Brothers and AIG," or "Wall Street," as in Barack Obama's greatest Aesop's Fables contribution of all time, playing us still more. But he continued to play us in Las Vegas with further fairy tales, saying:

"You would have thought that after this financial crisis…everybody would agree that proper oversight over the financial sector would be the smart thing to do -- just to prevent this from ever happening again….[T]hanks to Harry's leadership, we are about to pass this landmark legislation that will end this era of irresponsibility."

He was talking here about his financial reg reform bill, which he also touted in Racine, Wisconsin with further fabling, saying:

"As we speak, right now, we're on the verge of passing the most comprehensive financial reform since the Great Depression -- a reform that will prevent a crisis like this from ever happening again. It will protect our economy from the recklessness and irresponsibility of a few on Wall Street. It's a reform that makes sure taxpayers never again have to engage in a bailout for Wall Street's mistakes."

But that financial reg reform bill does exactly zero to "prevent a crisis like this from every happening again." What is needed to do that is fundamental reform of the Fed to mandate sound long-term monetary policy, which Barack Obama does not even remotely understand. Moreover, there is absolutely nothing in the bill regarding Fannie Mae and Freddie Mac, which Sharron Angle, a sweeping reformer criticized exactly wrongly by Obama as wedded to the status quo, has rightly pledged to liquidate. Nor is there anything in the bill to repeal the CRA.

Rather than acting to prevent this crisis from ever happening again, Obama has used the crisis from the start as a bait and switch excuse playing us to push America into the canyon of braindead, long outdated socialism. Instead of snake oil, Obama is hawking us his Grecian formula of magical stimulus beans and record shattering federal spending, deficits, and debt. Remember that was supposed to prevent unemployment from soaring to 8%. Instead we have suffered a year of unemployment around 10%, with Obama's pal Harry Reid telling us several months ago, "Today is a big day in America. Only 36,000 people lost their jobs today, which is really good." (Emphasis in original.) More than two years after the recession officially began, to still be losing jobs, as we did yet again last month, is not really good.

Moreover, instead of ending Wall Street bailouts, the Reid/Obama financial reg reform bill institutionalizes federal authority for still more bailouts. Then next year comes chapter 2 in the Obama nightmare, with sweeping, across the board, tax rate increases on America's employers and investors. Even before that, the double dip recession already beckons. With the Reid/Obama/Pelosi federal deficit already at $1.6 trillion for this year, what will it be in the double dip, which will come next year if not this year.  

In both Racine and Las Vegas, Obama made clear that what he thinks promotes economic growth and prosperity is government spending and still more bailouts and corporate welfare, which is what his green energy strategy involves. And he thinks what causes recessions and economic crisis is tax rate cuts on employers and investors, which he doesn't understand is what gives them the incentives to grow the economy. That is what he is saying in both speeches. And with economic logic like that, the American Dream and standard of living is gone, gone to Greece, and America will, indeed, eventually be just another country. This is where Obama, with his thorough socialist background and education, is taking America.

Barack Obama's Banana Republic

In Racine, Obama said, "So now we've got a choice. We can return to what we know did not work, or we build a stronger future. We can go backwards, or we can go forward." He added in Las Vegas, "I want to move forward. I think most people in Nevada want to move forward. America doesn't go backwards, we go forwards."

But the throwback economic logic, policies and philosophy that Barack Obama is peddling was cutting edge thinking in America over 100 years ago, at the start of the progressive era. It peaked in the 1930s, and petered out in the 1970s. The whole world is now smirking if not outright laughing at us because we are going through now the left-wing cultural revolution that trashed so many other countries decades ago. One of the main reasons for America's economic and military superpower preeminence was that it never succumbed to such foolishness in the past. Obama is a man 75 years behind his time.

President Obama touted in Las Vegas the $20 billion he got BP to fork over to the White House staff, laughing at Republican criticism with his trademark Saul Alinsky derision that is already wearying the American people. But the problem with this unprecedented power grab is that there is no law or legal standard governing distribution of that $20 billion. This is fundamentally contrary to how America works, which is under the rule of law. Who is supposed to get that money and how much? That has to be governed by an Act of Congress or a court of law, not the White House staff as walking around money. This is why Sharron Angle was so right to criticize this Obama stash as a slush fund. It is reminiscent of the practices of a third world banana republic, not a first world constitutional democracy.

At the start of the last century, Argentina had the same prosperity and standard of living as America. Then came Juan Peron and his Obamalike leftist demagoguery. Today Argentina is a still struggling third world country. This is where the Back to the Future Barack Obama, America's Juan Peron, is taking us. The American people can answer "Hell No, We Won't Go," and prove this is still America, by administering an unprecedented brutal defeat to Obama's Socialist Democrat Party this fall. But doing that requires focusing and getting to work now.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.