Spring Break
Is Pres. Obama seeing the economy clearly?
Ian Bezek
Issue date: 6/24/09 Section: Opinion
With the end of the catastrophic Bush presidency, Americans rightly hoped that better days were coming.
In many ways, their hopes have been fulfilled. For instance, American foreign policy has markedly improved under President Obama.
However, the economy continues to steadily deteriorate despite the optimistic chatter we've heard from Obama and the media.
In particular, voters were told that if they enacted Obama's stimulus plan, the bleeding in the job market would cease. The primary goal of the stimulus was to halt the stunning rise in unemployment.
Obama promised the American people upon taking office that his stimulus plan would create or save 600,000 American jobs.
The plan, however, simply hasn't worked. The economy has shed 1.6 million jobs since Obama took office - far more than the president expected.
The Associated Press reported that, "By now, according to earlier White House economic models, the nation's unemployment rate should be on the decline. The forecasts used to drum up support for the plan projected today's unemployment would be about 8 percent. Instead, it sits at 9.4 percent, the highest in more than 25 years."
Obama's stimulus projection was a miscalculation of epic proportions. Unemployment is 1.4 percent higher - which translates into roughly 2 million missing American jobs - than Obama told us it would be if we passed his expensive stimulus plan.
Some people will reasonably argue that Obama's not yet had time to have a big impact upon the economy. However, Obama has taken ownership of the economic crisis as he has reassured us that things are starting to improve, saying that he sees "glimmers of hope" on the economic horizon.
One must wonder, however, if the light he sees is only an oncoming train. We already saw how his vision of stabilizing employment was merely a mirage.
Some of his other economic policies also call into question his judgment. In particular, his half-baked homeowner assistance program can only lead to further troubles.
His plan seeks to stave off foreclosures -- a laudable goal. The program fails, however, because it causes homeowners to have to refinance into loans where they build little or no equity in their homes.
Instead of each payment getting them closer to owning their home, a borrower will only run in place on their banking master's treadmill.
I spoke with a banker last week who, in response to a question, jokingly told me things would be OK.
"Yes, do not worry -- I think all U.S. mortgages can become semi-perpetual debt," he said.
Herein lies the problem. This whole economic debacle was the result of too much debt and not enough income. Instead of forcing people out of homes they can't afford, the Obama plan allows homeowners to eternally rent houses from their banking overlords.
Does this benefit anybody in the long run? Banks, of course! Homeowners, however, will receive the short end of the stick from Obama's program as they get to endlessly make payments on houses they'll never be able to afford - especially if the nation's job losses continue to mount at an alarming rate.
While there have been limited signs of recovery (the U.S. stock market has risen sharply in the previous months) a near-consensus of economic indicators point to further suffering ahead.
The nation's trucking and railroad industries continue to sputter as demand for products has declined. When transportation traffic plunges, the economy typically weakens.
Not surprisingly, since products are sitting in warehouses rather than getting shipped to consumers, sales tax revenue has dropped as much as 10 percent from last year across America, leaving state governments in fiscal crises.
Consumers aren't shopping, workers are getting axed, state governments are broke and homeowners are getting ripped off yet again. In the face of all this, I have to suspect that Obama's economic crystal ball has turned cloudy.
Editorials Editor Ian Bezek is a senior economics major. Letters and feedback can be sent to letters@collegian.com.
In many ways, their hopes have been fulfilled. For instance, American foreign policy has markedly improved under President Obama.
However, the economy continues to steadily deteriorate despite the optimistic chatter we've heard from Obama and the media.
In particular, voters were told that if they enacted Obama's stimulus plan, the bleeding in the job market would cease. The primary goal of the stimulus was to halt the stunning rise in unemployment.
Obama promised the American people upon taking office that his stimulus plan would create or save 600,000 American jobs.
The plan, however, simply hasn't worked. The economy has shed 1.6 million jobs since Obama took office - far more than the president expected.
The Associated Press reported that, "By now, according to earlier White House economic models, the nation's unemployment rate should be on the decline. The forecasts used to drum up support for the plan projected today's unemployment would be about 8 percent. Instead, it sits at 9.4 percent, the highest in more than 25 years."
Obama's stimulus projection was a miscalculation of epic proportions. Unemployment is 1.4 percent higher - which translates into roughly 2 million missing American jobs - than Obama told us it would be if we passed his expensive stimulus plan.
Some people will reasonably argue that Obama's not yet had time to have a big impact upon the economy. However, Obama has taken ownership of the economic crisis as he has reassured us that things are starting to improve, saying that he sees "glimmers of hope" on the economic horizon.
One must wonder, however, if the light he sees is only an oncoming train. We already saw how his vision of stabilizing employment was merely a mirage.
Some of his other economic policies also call into question his judgment. In particular, his half-baked homeowner assistance program can only lead to further troubles.
His plan seeks to stave off foreclosures -- a laudable goal. The program fails, however, because it causes homeowners to have to refinance into loans where they build little or no equity in their homes.
Instead of each payment getting them closer to owning their home, a borrower will only run in place on their banking master's treadmill.
I spoke with a banker last week who, in response to a question, jokingly told me things would be OK.
"Yes, do not worry -- I think all U.S. mortgages can become semi-perpetual debt," he said.
Herein lies the problem. This whole economic debacle was the result of too much debt and not enough income. Instead of forcing people out of homes they can't afford, the Obama plan allows homeowners to eternally rent houses from their banking overlords.
Does this benefit anybody in the long run? Banks, of course! Homeowners, however, will receive the short end of the stick from Obama's program as they get to endlessly make payments on houses they'll never be able to afford - especially if the nation's job losses continue to mount at an alarming rate.
While there have been limited signs of recovery (the U.S. stock market has risen sharply in the previous months) a near-consensus of economic indicators point to further suffering ahead.
The nation's trucking and railroad industries continue to sputter as demand for products has declined. When transportation traffic plunges, the economy typically weakens.
Not surprisingly, since products are sitting in warehouses rather than getting shipped to consumers, sales tax revenue has dropped as much as 10 percent from last year across America, leaving state governments in fiscal crises.
Consumers aren't shopping, workers are getting axed, state governments are broke and homeowners are getting ripped off yet again. In the face of all this, I have to suspect that Obama's economic crystal ball has turned cloudy.
Editorials Editor Ian Bezek is a senior economics major. Letters and feedback can be sent to letters@collegian.com.
Be the first to comment on this story