Obama Blind to Economic Realities

Wednesday, 26 Jan 2011 08:57 AM

By Ronald Kessler

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President Obama’s State of the Union speech makes it clear how little he has learned from the economic crisis facing the country and the message of the November election.

Like a car stuck in snow, he continues to spin his wheels by proposing new government spending and no spending cuts. He dressed up his spending proposals by calling them investments. He cited a few examples of innovations like the Internet developed by government workers. But for every such example, there are millions of others such as the invention of the light bulb, telephone, phonograph, computer, and search engines like Google that private enterprise produced.
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In fact, Obama is proposing the same kinds of spending on teachers and construction workers that brought little benefit with his stimulus bill amounting to nearly $1 trillion.

While Obama talked in his speech about reducing the deficit, he proposed only a five-year freeze on domestic spending that would reduce the deficit by $400 billion over 10 years. But the deficit is now $14 trillion and grows every year because of interest payments. The proposed freeze would cut the deficit by $40 billion a year, less than 3 percent of the White House's projected 2011 deficit.

As it is, Obama has increased federal government spending to 25 percent of the economy, from a modern average of between 20 percent and 21 percent. No one can hope to make a dent in the deficit without the kinds of significant cuts Republicans propose.

As Rep. Paul Ryan, chairman of the House Budget Committee, said in his rebuttal to the State of the Union message, after two years, the “unemployment rate remains above 9 percent, and government has added over $3 trillion to our debt.”

Soon, the Wisconsin Republican said, the debt will “eclipse our entire economy, and grow to catastrophic levels in the years ahead . . . We hold to a couple of simple convictions: Endless borrowing is not a strategy; spending cuts have to come first.”

Even cuts proposed by Republicans do not go far enough to cut government waste. Those of us who have dealt with the government for decades know that besides cutting specific programs, the number of government workers could be cut in half without reducing government services.

That’s because instead of making a phone call, government workers, lacking a profit motive, will call a meeting. Instead of appointing one supervisor, the government will appoint 10. Instead of looking at the Internet to obtain information, they will appoint a study committee.

While Obama’s proposal to cut corporate income tax rates is welcome, his overall approach suggests he is blind to economic realities and the desire of voters for an end to out-of-control government spending. While his appointment of aides with business experience is also welcome, his State of the Union speech shows that those changes are mere cosmetics.

As Dave Keene, chairman of the American Conservative Union, has told me, now that Republicans have regained power, they must avoid overreaching, as happened when Newt Gingrich was speaker and when Obama entered the White House.

“They have to avoid getting ahead of their supply line, or they are going to get cut off, and it is going to be a short-lived majority,” Keene says. Referring to Bill Clinton’s decision to move to the center in his second term, Keene adds, “The other thing that they have to do is hope that Obama isn’t Clinton.”

Obama’s State of the Union speech makes it clear that is not about to happen.

Ronald Kessler is chief Washington correspondent of Newsmax.com. View his previous reports and get his dispatches sent to you free via e-mail. Go here now.

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