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Saturday, July 11, 2009

The President as Pollyanna

What do you do when you've spent several TRILLION dollars, ballooned the country's deficit by four hundred percent, and all you have to show for it is nearly 3 million jobs lost in less than six months? You claim that everything is working according to plan. That's exactly what the president did this morning in defending the stimulus.

Responding to Republican criticism that we've lost jobs the president said this.

As I made clear at the time it was passed, the Recovery Act was not designed to work in four months – it was designed to work over two years,” Obama said. “We also knew that it would take some time for the money to get out the door, because we are committed to spending it in a way that is effective and transparent.”

This comes a day after it was revealed that $16 million of the stimulus went Speaker Pelosi's district for a project to study mice. It's five months after the web site,, was created but still doesn't actually track any of the specific projects. (this despite the White House spending $18 million to design it) How's that for "transparent" and "efficient"?

I don't know whether to laugh or cry. Our unemployment is about to cross 10%. It will likely reach at least 11%, but not to worry, by February of 2011, the stimulus will work. My question is what does the president mean by "work". Does anyone really believe that unemployment will be below 5% by then? For that matter, does anyone believe that unemployment will be below 6.7%, what it was when he took over?

Remember, when the president told the country that we had to pass the stimulus right away. Now, he tells us it will take two years to work. That sounds like hurry up and wait. Wouldn't it have made more sense to spend an extra month or two debating a stimulus but have it work more quickly than two years?

With every passing month, the president keeps moving success back. At the end of May, the administration said that they would increase the speed of the stimulus in the summer. Now, it's summertime and the administration is saying that the second half of the year will be when we see a difference. Now, the president is saying everything will work in two years.

No one expected the economy to be fixed by now. We just expected to have hope by now. For instance, the president has proclaimed that the recovery act pulled "our financial system and our economy back from the brink." Has it though? Has anyone attempted to get a mortgage recently? There's been a total of $15 billion worth of commercial real estate transactions done this year. (none securitized) That's down about 90% from last year, which itself was down 50% from 2007. Residential lending continues to get more restrictive daily. Has anyone tried to get a residential mortgage? Expect to wait months, receive dozens of unexpected conditions, and that's only if you have a credit score of 740 or above, 20% in equity, and live in a single family residence. Anything else and you're likely facing huge interest rates, if you even qualify.

So, if no one is lending, but the "financial system is back from the brink", then it sounds as though the president saved a bunch of bankers from themselves so they could continue making six and seven figures and share that with none of the rest of us. That's not saving the "financial system" but just his banker friends.

So, as the economy continues to get worse, the president will continue to urge for patience. That will wear more and more thin the longer we wait. The problem soon of course becomes whether or not we are being patient over a policy that isn't ever going to work. The judgment on that has not been settled yet, but with each passing day, that question becomes more relevant.

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