Vicious Rants of an Angry Yellow Man

Obama is getting criticism from both Democrats and Republicans for his economic stimulus plan. Everybody is talking like he or she knows the best way to turn around the economy. As I have said many times before: nobody really understands economics. It is not an exact science. It is not like chemistry where if you put 2 hydrogen atoms with an oxygen atom, you will always get a water molecule. Nobody knows what plan will get us out of the trouble we are in now, not even the best economists. So even as I don't agree with everything in Obama's plan, I find the criticisms to be of no value except for political purposes.

It is not surprising that the Republicans criticize the Obama plan. They are the opposition after all. It is also reasonable to question the huge amount of money that will be spent. We will run a big deficit with this. Of course we already ran a huge deficit under Bush so it is hard to say that the Republicans are the fiscal conservative they claim to be. And the bailouts, which are of questionable value, was the plan of the Bush's treasury secretary Paulson.

Pat Buchanan argues that Obama should act like Regan during the economic crisis of 1980s rather than like FDR during the Depression. It is a reasonable argument that we may not have come out of the Depression because of FDR's alphabet soup programs which we learned in high school history. Some historians have claimed that the Depression only ended with WWII. Buchanan said that Regan's supply side economics of tax cuts and letting the private sector do the work got us out of the crisis faster. But for every Buchanan, the Democrats can find an economist who says the opposite. For example the situation in 1929 was much worse than 1980s and if WWII stimulated the economy, it was the government and the military that did the stimulating by buying weapons, ammunition, planes, ships etc. In the 1980s the tax rate was cut from 70% to 28%. With the Bush tax cut it is around 35% now, so even if we cut to 28% like Regan did, do you really think it would stimulate growth quickly? And the Bush tax cut has not help the economy and has produce a record deficit. Regan did improve the economy but also left such a big deficit that Bush #1 had to raise taxes even though he had infamously said: "Read my lips, no new taxes." This led to his loss to Clinton.

So why do the Democrats want to go against their president? They don't like tax cuts and think that Obama is caving in to the Republicans by adding tax cuts and credits to his bill. They also want more spending, believing that 800 billions or so is not enough. I agree that tax cuts won't do much right now and tax rebates won't do anything at all. Witness the rebate last year which stimulated nothing. But spending for the sake of spending will not be effective. We are going into big deficit and our children will pay for it. Instead of arguing over how much, we should be looking into how we spend the money. As I said before, infrastructures in the country are in bad shape. So the money we spent there, even if doesn't help the economy as much as we hope, will at least provide us with better roads, bridges and communication systems.

Ultimately there is a limit of what anyone can do. It is usually being at the right place at the right time that makes one a hero. Alan Greenspan was the idol of both Republicans and Democrats when the economy was doing well. Now everybody says he made a lot of mistakes. Even he acknowledges of not seeing the disaster that was looming. FDR and Regan were both at the right place at the right time for them. Their plans were totally different. But they both were able to give confidence to the nation. I think that was the main difference between them and their predecessors, Hoover and Carter. If Obama can continue to inspire confidence his plan will succeed in the eyes of history, whether or not it is the right plan.