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  • Morning Bell: Where Are the 'Hard Choices'?

    Just like all his other speeches, President Barack Obama’s inaugural address delivered lofty rhetoric yesterday, but as is often the case with Obama, the speech provided more heat than light when it came to tough issues. Seeking to set a tone of accountability, Obama said:

    Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. … The state of the economy calls for action, bold and swift, and we will act. … The question we ask today is not whether our government is too big or too small, but whether it works.

    The “bold and swift” action the president is referring to is the currently priced $825 billion economic stimulus package that the House introduced last week. Everybody expects that number will only go up after the Senate introduces their own bill, but let’s crunch the numbers on Obama’s plan as is. If Congress passes an $800 billion, two-year stimulus bill, the deficit in 2009 could stand at $1.31 trillion and could be $1.27 trillion for FY 2010. As a percent of GDP, the FY 2009 deficit will be 9.2% of GDP, and the FY 2010 deficit will be 8.7% of GDP. Moving to the total obligations of the federal government, if the stimulus passes our national debt will be $13 trillion in FY 2009 (92% of GDP) and $14 trillion in FY 2010 (95% of GDP).

    Obama seems to believe that deficit spending will expand the economy. If that were true, then the current $1.2 trillion deficit — the largest in history — would already be rescuing the economy. It’s obviously not. So why would $800 billion more of the same suddenly end the recession? How is borrowing and spending money at faster rates a change from our past “collective failure”? It is not.

    Worse, there simply is no evidence that massive government spending will work. What the evidence does show is that Japan’s massive infrastructure spending in the 1990s did nothing to help their economy and that studies on infrastructure spending in our country show it does next to nothing in terms of net job creation. And even if infrastructure spending could result in net job creation, it would come too late. The Congressional Budget Office recently released a study showing that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by 2010, long after the CBO and most economists predict the recession will have ended.

    Obama’s deficit spending stimulus is the exact opposite of making “hard choices.”As Politico points out today, while “Obama frequently talks of the need to transcend partisanship … In fact, there are few examples of him making decisions during the campaign or the transition that offended his own party’s constituencies.”

    If the president is interested in ushering in an age of what works, he could suspend the Davis-Bacon “prevailing wage” rules for all infrastructure stimulus spending. A 2008 study by Suffolk University and the Beacon Hill Institute found that Department of Labor estimates for the “prevailing wage” in cities are about 22% above the actual wages paid in these cities and that taxpayers could save almost 10% in federal building costs if they were suspended. If Obama spends $400 billion on infrastructure, he could save taxpayers $40 billion. But the unions that Obama is beholden to would never allow this.

    Our country is facing tough economic times, but they are no worse than Ronald Reagan faced in 1982. Reagan did make some unpopular choices, but those choices set the stage for 20 years of economic growth. We sincerely hope President Obama chooses a similar path.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    30 Responses to Morning Bell: Where Are the 'Hard Choices'?

    1. len, Alexandria,KY says:

      His first Hard Choice just was served to him to make by Pelosi with a pork laden recovery plan.. Obama said " No pork" Pelosi seems to say " Really??"

      Who is the one with the Cojones??

    2. Angry Dumbo says:

      Hard choice like buying a cadillac when you are upside down on your mortgage. Don't worry, the federal government will bail you out (provided you are a federally recognized victim). The current mortgage debt crisis is not a liquidity issue but a solvency issue. As Obama focuses on unemployment he is 180 degrees out of phase with his own advisor Volker's prescription to raise rates which saved the U.S. economy in the early 1980s. So-called conservative advisors providing Obama cover should be ashamed. Ultimately interest rates will have to rise to attract capital, and its welcome back stagflation.

    3. Elaine Kahl says:

      Regarding the solution with another bailout is

      outrageous! Where are the checks and balances

      when in fact the banks who will be rescued this

      go around namely, Wall St., Merrill Lynch,Auto Ind., Wachovia (who was quoted as donating $16.5M

      to LaRaza), NY Times, Bank of America etc., etc.

      Why do we reward criminal behavior with taxpayer

      dollars??? Solution: Give back to the taxpayer

      effective immediately: Stop taxing their social

      security payments, stop Alternative Min. Tax, reduce the taxes on oil, gas, food, driver reg.,

      in other words "user taxes"!!!!

      Question that begs for an anwer: How many adj.

      and FHA Loans were given without documentation!

      We do not want to "bailout" individuals who have

      entered this country illegally. This should be

      a priority and should be mandated concerning who

      receives the bailout! Overleveraging is no excuse

      for breaking the law!

    4. Francis X. Watkins, says:

      One definition of insanity is to do the same thing over and over expecting a different result…..

    5. Joe, Sheridan, WY says:

      I doubt Obama has the guts to stand up to his own party. He might try to in his first few months but after he gets slapped around by the Democrats who think that they run the country he will cave in. My guess is he will have the whole country on welfare, I mean "economic stimulus packages" in three years.

    6. Ozzy6900 says:

      President Obama states "The question we ask today is not whether our government is too big or too small, but whether it works.". I beg to differ, the government does NOT work because it is too big!

    7. Edward Brynes says:

      In connection with the comment on the Dow Jones Average going below 8000: note that the DJIA has now crossed below 8000 three times since October, and each time has recovered to above 8000 the next day. This leads me to doubt that the current recession is as deep as generally supposed. In a few months a massive deficit-spending stimulus program may look like a bad idea even to liberals.

    8. Maggie Schwarz Slate says:

      How can I add my "thank you" to the ones you are already sending to the wonderful 43rd President and his most gracious wife, Laura? Thank you!

    9. Troy, Mountain View, says:

      As usual, the Morning Bell has done a good job of defining our nation's economic problem, but with the exception of it's suggestion to ". . . suspend the Davis-Bacon 'prevailing wage' rules for all infrastructure stimulus spending.", no specific what to do / how to do it recommendations were proffered.

      Considering The Heritage Foundation's estimable Board and advisors, an intelligent, open-minded reader might ask why this group – through 'The Morning Bell' – can only harp, whine and complain about President Obama's apparent recovery plans and initiatives? It seems to this reader that the further right of center an organization or individual is, the louder and more frequent the harping, and the correspondingly less frequently proposed are any constructive, practical, practicable, and moving forward solutions.

      Our new president has suggested a coming together of our best intellects, movers and shakers; isn't this a great time for the "right wingers" to start rowing instead of sitting at the stern of the vessel shouting? To not do so at this time of great need will reduce the conservatives to an entirely insignificant stature, a very small fly in huge jar of ointment – easily eradicated.

    10. Ben, Jasper, GA says:

      Has anyone made an estimate as to when the hypr-inflation will begin from the massive "stimulus" proposed.

    11. Dorothy Morgan, Okla says:

      OMG! Whose idea was it to pay off the Wall Street crooks to start with? Then again? Where is Paulson and where is the money? 90% of it is unaccounted for. We don't reward bank robbers with more money….well…usually.

      Then to add insult to injury, those same corporations spent our tax monies on an

      Inauguration yesterday. Let's take them to trial, do a little water boarding to get them to talk and store them away somewhere. Leeches!!

      We need a list of their personal assets so we can dispose of them….back into our Treasury.

      Enron all over again….but in spades! How dumb can one country be?? And how on earth can all this be remedied? Simple……..it can't.

    12. Francis X. Watkins, says:

      One definition of insanity is to do the same thing over and over expecting a different outcome…

    13. Jerry Pollard says:

      We still are not allowed to develop an oil and gas exploration plan.That would be a hard choice!Standing up for the military.That would be a hard choice!Stop paying welfare to families that choose not to marry because the welfare checks would stop!That would be a hard choice!Stop people from using emergency rooms as their primary physician.That would be a hard choice!Restore discipline in the classroom and respect for teachers.That would be a hard choice!Really stop earmarks and pork attached to every bill.That would be a hard choice!Publish data on the number of lobbyists in DC and $ they spend.Send the lobbyists home!Limit Congress terms! It is PUBLIC SERVICE NOT A CAREER!That would be a hard choice!Stop deficient spending!That would be a hard choice!Use common sense instead of "political correctness".Stop frivolous law suites!Cleanup TV and the movies! Yes make the ACLU display a modicum of common sense!That would be a hard choice!Make each household accountable and responsible for their actions!Punish wrong doers! Drug dealers should be sentenced to death or life without parole.That would be a hard choice!Reward inventiveness,hard work and intelligence.That would be a hard choice!The air in DC must be very rarefied and all our Representatives and senators become euphoric and only make decisions that will insure their reelection and not is what is good for the country.Make politicians not play to their constituents to the detriment of the country.That would be a hard choice!Do not let this country accept the premise that the country must be part of a world order ie,world economy,world court,etc.

    14. William E. Turner says:

      Heritage Foundation: I am trying to get the e-mail address that you offered last week where people could send a message to President Bush after he left office. I would love to send him a message, and thank him for his great service to America, and the World. I called 202-608-6155, and was told to send e-mail to bob.bluey@heritage.org. It came back saying this name and address was unknown. Please help me. Thank you. William E. Turner 210-341-9494

    15. Mike, Hickory, NC says:

      Yet again: What's a definition of insanity? Answer: Continuing to do the same things, expecting different results.

      Also:

      Such "sincerely hop(ing) that Obama chooses a similar path (to Ronald Reagan's)", to quote the above article, if that isn't "tongue-in-cheek" (as in actually knowing better), then it certainly does seem to indicate a "say it ain't so" state of denial and hoping that a Leftist/Socialist Comrade "President" Obama, and his comrades, won't choose to "burn the farm down" for their Leftist Marxist/Communist/Socialist "inevitable march of history".

      To those of us with our minds, "eyes and ears", and, yes, "hearts" working, there is no doubt we shall now see even more destructive, heart-wrenching, Leftist/Socialist insanity.

      Therefore also we know what we're in for during the next 2 to 4 years at least, and all we can do in the meantime is be "the resistance", not entirely unlike "the resistance" in Europe against previous other forms of Socialism during World War II (including both German and Soviet Socialism), and other Socialists before, during, and after that time to this day, so that we can repair as much Leftist/Socialist damage by the Socialist Left as we possibly can, recover as much freedom and prosperity lost to them as we possibly can; thereby also saving our country, the U.S.A. (the United States of America), from their making it (officially or not) the U.S.S.A (the United Socialist States of America), and so altogether rescue from the Socialist Left our nation's place as "the last, best hope of mankind", as described by Ronald Reagan.

    16. Sally Smith Birmingh says:

      Mr. President,

      Thank you for your service to our country. Thank you for being a man of God, whom to this day, I believe was placed in this office at this time in our history. I don't believe your opponents could have kept our country safe over the past 8 years.I pray that history will judge you fairly and truthfully, I know God will. God bless you and your family with a quiet and peaceful life out or the public eye.

      Sally Smith

    17. LVKen7@Gmail.com - says:

      In the 61 days between Obama's election and inauguration the National Debt has gone up

      $92.6 BILLION $$$$$.

      Reducing THAT would be a GOOD CHANGE.

      KJ

    18. kENNETH bURFIRD, McA says:

      Obama and the liberal Democratic Congress are never going to do the right thing. And some of the Repiblican Congressmen are so afraid that they are going to be called racist that they will not oppose the stimulis package. Spending on infrastructure stimulates primarily union labor. After the road is built or the bridge is constructed the stimulated job is over. Roads and bridges do not produce anything for our economy. There is no continuing stimulus.

    19. Walt in El Paso, TX says:

      With Obama in charge we are headed for the Jimmy Carter days +++

    20. Pingback: Government Can’t Save You: Just Live Your Life « Blog Entry « Dr. Melissa Clouthier

    21. Chris Berg, Albuquer says:

      Pointing out the problems won't solve them, we have to strike. We have a hundred million Americans on the dole. They elect Democrats, like Obama who will protect their free ride. They'll overtax businesses and the seventy million private sector workers into bankruptcy. They use rationalizations, like "those greedy corporations" to justify their dysfunctionality. A minority like Conservatives can't get elected, anymore, especially with all the propaganda going against them. Only a mensunion.org can strike and force reforms. Get off your butt and join or I'll see you on the bread-line sooner than you think. Shortly after, you'll be in the labor camps. Democracy = Communism, the corrupt, vote buying, kickbacks political system won't reform itself. What are you waiting for? Get on the mailing list at least. It doesn't cost anything. Chris Berg mensunion.org

    22. Dennis A Social Circ says:

      Obama is just blowing smoke, he can not do anything that the dem congress does not want. As usual all he is doing is telling what he thinks we the people want to hear. The proof is in the pudding. I wonder how sour it will taste?

    23. Roy Greenland, Roano says:

      In his inaugural address, Obama said, "It is the . . . selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours." Yesterday he told high level officials they would have a wage freeze. If Obama is expecting workers to cut hours to save a friends job, why can we not expect government leaders to lead and show us the way? Instead of freezing their pay, let them demonstrate great selfless leadership by cutting their pay (akin to and having the same effect as cutting hours), doing their part to "[see] us through our darkest hours."

    24. Suzanne in Denton, T says:

      The fastest way to put money in people's pockets would be to move to the Fair Tax instead of income tax, and to cancel all welfare to individuals and corporations. Also, known as farm subsidies, wlefare housing, WIC, TANF,Medicaid, et al. Bailouts are just giant welfare projects.

    25. Ken, Atl. says:

      I think it is time to identify who the republicans are that sold their conservative values down the drain. It is time to acknowledge at least 10 conservatives or republicans or democrat, for that matter, that will represent America and let's start putting these people in the forefront. We do not need to take a wait and see attitude toward our current president as we know in our hearts what he thinks are the right choices. We all wish President Obama Godspeed, but if didn't spell out in his campaign what he is going to do, we know it's won't be in the conservative's best interest.

    26. ella quinn kinsto says:

      I think we will all want George bush back after4 years of obama.I know i will miss George Bush and Laura Bush.He was a great president. He kept us safe for eight years.Thank you George Bush.

    27. Carl Ledbetter, SMSg says:

      As a 23+year military retiree, I would like to personally thank both you and Mrs Bush for your leadership and integrity. You have both portrayed true Americanish and set an example for others to follow. It has been an honor to have you as Commander in Chief. Maintaining you honor and sticking to your beliefs even while being constantly bashed by liberals throughout the country has kept this country safe from agressors. The day you left office weakened our country and only time will tell where we will end up. I pray for God's intervention and guidanace in maintaining our security. However, I fear the current administration will not hold firm, but will bend to liberal and socialistic ideas. God bless you both in the future.

    28. ella quinn kinsto says:

      tHANK YOU CARL LEDBETTER FOR SERVING OUR COUNTRY.I KNOW GEORGE BUSH IS PROUD OF YOU AS WE ARE.

    29. Deborah Miller; Youn says:

      President and First Lady Bush served us and country with the dignity, grace and sirituality we needed after 911. I will miss them. After 911 we can not forget that we did NOT have another attack on our soil. Also the enemy is still mad at us so that must mean that we were doing the right thing. As a mother of a retired soldier I thank God daily that President Bush was his Commander in Chief. God Bless them both and I hope they enjoy their retirement. The proof will be in the pudding as my Granny used to say so lets all see what history will show.

    30. Gorio, Calilligalia says:

      The "Hard Choices" will be made by the usual victims, the average tax paying American who will be asked to make the "hard

      choice" of paying his taxes to a class of rich protected government leaders who never take a cut/layoff/rollback or restructuring and who still have the gall to complain when their money pot gets to low to allow all of them to stick their snouts in the pot at the same time.

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