AMERICAN ISSUES PROJECT

The Obama Administration’s economic house of cards is trembling and on the verge of collapse. This is not a surprise to those who paid attention to the sloppy workmanship that went into it. Nonetheless, the American people fell in love and bought the house sight unseen. Now, however, it has become apparent that it is a disappointment. Rather than purchasing a structure based upon sound design and construction, Americans got one that was thrown together without any regard to safety, detail, or craftsmanship. In spite of all this, President Obama told us we needed the house immediately and that there was no time to inspect its construction or verify that the foundation was sound or that its electrical and plumbing systems were in good working order. Instead, he insisted we had to move in immediately or dire consequences would follow. Five months later, it is clear that our house is falling apart. Obama and his administration, however, are going to great lengths to convince the American people that the problems with his economic house of cards are just cosmetic and easily remedied with a new coat of paint and a few extra nails. But the shoddy construction and design flaws have become obvious to everyone who is paying attention.

Barack Obama’s $787 billion stimulus plan is failing. The bill the president said would stimulate economic growth is actually decelerating the economy because there very little stimulus in the stimulus bill. Instead, the majority of the spending in the bill is directed toward accountability, education, aid to state and local governments, health care, energy programs, and food banks and other community organizations. As a result, 1.6 million jobs have been lost since president Obama’s stimulus bill passed. Oddly, though, he keeps repeating the claim that he “saved or created” 150,000 jobs, a number that is unconfirmed and unconfirmable because the US Department of Labor does not keep records of “saved” jobs. So where is Obama getting this number? Jared Bernstein, economic advisor to Vice President Biden, said he the figure was an estimate based upon what jobs would have been lost if the bill was not passed. In other words, the number was made up out of whole cloth. The lack of factual support, however, does not stop the president from continuing to repeat his claim. In fact, he is doubling down and saying he will “ramp up” the stimulus so as to save another 600,000 jobs this summer. Again, these numbers will be impossible to confirm.

The president told the American people that his stimulus bill would hold the unemployment rate at 8 percent. Without the bill, he said the unemployment rate would top out at 9 percent. Today our unemployment rate is at 9.4 percent, which is a significantly steeper rate than originally projected. Many economists and analysts are now predicting it will hit double digits by the end of the year. Mr. Bernstein is trying to shift the blame for the 9.4 percent unemployment rate on former president Bush, saying the unexpectedly high rate is due to the economic figures from last year’s 4th quarter. As the saying goes, only a poor carpenter blames his tools.

The president’s $75 billion Homeowner Affordability and Stability Plan, is also failing to live up to his expectations. President Obama said it would prevent three to four million homeowners from losing their homes to foreclosure, but so far its record is, to put things politely, rather dismal. The program was introduced in February, and three months later, only 100,000 people have been offered loan modifications. Naturally, this has done nothing to stem the tide of foreclosures; rather, foreclosures have risen by 32 percent in April 2009 compared to April 2008. The New York Times reports that, according to the Mortgage Bankers Association, in the first three months of 2009, over 5.4 million loans were “delinquent or in some stage of foreclosure.” Unfortunately, as the economy continues to deteriorate due to the president’s failing stimulus bill, more people will lose their jobs putting more homeowners at risk of foreclosure. Since many of our economic woes are related to the collapse of the housing market, our economy will have great difficulty recovering as long as the number of foreclosures continues at this pace.

Obama’s economic schemes are small potatoes compared to his proposed spending, which threatens to compound the already deepening recession. In order to fund his massive $3.6 trillion budget, the government must print more money as well as borrow more money, both of which create inflation. Inflation undermines the bond market, which in turn forces up interest rates. Increasing interest rates means fewer houses will be sold or refinanced, very bad news for an American economy that is already battered and bloodied. In fact, if interest rates hit and hover around 5.5 percent, as much as 70 percent of refinancing activity could be eliminated as homeowners lose out on any financial benefit from refinancing. This will put even more people at risk of delinquency and foreclosure and could send our economy into another tailspin.

President Obama told the American public that his economic plan was a well designed and constructed solution to America’s economic problems, but it’s becoming clearer that, like a poorly constructed house, it may actually cause more problems than it solves.  When a homebuyer moves into a house constructed with shoddy workmanship, he can sue the builder or the prior owner if they conned him into the purchase.  Unfortunately for the American people, they will have to wait until 2012 to undo this awful mess, and even then it could take many years to fix the problems that are being needlessly created. By then a lot of Americans will have spent many sleepless nights in their new home.

---