Wednesday, October 1, 2008

Economic Downward Spiral Good For Obama

It appears that the looming economic disaster is helping Obama.
This is because the president and by association his party gets blamed for economic woes.
In most cases this is unfair because the President does not have as much influence on the economy as people think.
Also some people are actually saying things are so bad we need another FDR and that is Obama.
First FDR did not get us out of a Depression. All of his programs did nothing to turn the economy around. What got us out of the depression was WWII. First Arming England and Russia through the lend lease program and then our own forces when we entered the war followed by a surge in demand for consumer goods after the war.
Second Obama's economic policy would not help it would hurt. We want to grow the public sector economy not the government sector. Even if Obama did not raise taxes (of course we know he will) he would limit the amount of capital available to the private sector through deficit spending. There is not an infinite supply of capital. The more the government spends the less capital is available to finance the public sector.
The Federal Governments spending is the biggest problem. Obama says he will spend more. McCain says he will spend less. A pretty clear dichotomy between the two.

By the way the "Bush" tax cuts have not in any way contributed to the current economic problems. Revenue collection has increased not decreased as a result of the tax cuts. The cuts spurred economic growth. More growth equals more taxes (yes I know at some point in tax cutting this no longer holds. We have not yet reached that point). The fact of the matter is that after 9/11 we were headed for a recession. Anybody remember that? The Republican response. cut taxes! This lead to 7 years of a strong economy . It would still be strong if the housing bubble did not burst. A housing bubble caused by democratic policies.

Of course I have little hope that the public will grasp this. It is much easier to understand take from the rich and give to the poor is the cure. Election advantage OBama the socialist.

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