9. January 2009 by David A. Peterson.

President-elect Obama has put together his economic team in the past few weeks. Both Republicans and Democrats were pleasantly surprised at the distinguished list of candidates that have been proposed. All very experienced, you might not like their previous political views but it is a team that should hit the ground running.

What a lot of us are worried about is just exactly what will they be doing when they hit that ground. Yesterday President-elect Obama began to sell his economic stimulus package. I was working out at the gym and at least 6 of the 12 televisions above my head were reporting his package without any commercial interruptions.

What struck me at that moment was that the President-elect was trying to sell the American public on his massive stimulus package. You have to wonder why you would need to “sell” this package. If the economy is in such a mess shouldn’t it be obvious to everyone that the stimulus package is needed?

I realized that even though he was on just about every cable channel and all of the networks he wasn’t trying to sell the American public. He was trying to sell the Legislative branch of our government. Specifically he was trying to sell his own party in Congress. 

Democrats and Republicans are aghast at the shear size of this economic stimulus package. $800,000,000,000 is a whole lot of money. That is on top of our current federal budget deficit.

If the situation was as dire as it appeared in October 2008 then you could make a case for another stimulus package. Some amount of deficit spending is probably needed to spur the economy forward.

This issue at this time is the shear size of the package. In case anyone hasn’t notice the crisis has just about run its course. I agree this past fall was a very scary period of time. I was glued to the economic action almost 24/7. I figure last year we lost 1/12^th of our total yearly economic activity due to the credit crisis. It probably wasn’t that bad but I bet it was close. However now we are in a normal recession. It may be severe but it is a recession.

Recessions have to run their own course. Governments are not big enough to actually drive the economy for more than a short period of time. There just isn’t enough government related activity that is truly needed to bring the country back to full employment. Bridges need to repaired and roads need to be built but after that – what? Build senior citizen centers? Parks? New City Halls?

That type of massive building was tried for 10 straight years during the great depression. To be truthful FDR did employ millions of people but almost 70 years later most economists are still debating if all of that activity was good for the economoy or was it at the expense of the private sector. It is well known now that all of that building did nothing to relieve the overall unemployment of the era.

It appears to me that the legislative branch is looking in the rear view mirror. They have to be thinking… “If we spend all of this money will it actually help or hurt the economy in the long run?” Will we still be looking at 7% unemployment or higher if we spend all of that money?

If the economy was still spiraling out of control then the answer may be a little simpler. But the economy is starting to stabilize. Unemployment is rising and will continue to rise for the next 6 months but that is to be expected and that will happen regardless of what Washington spends over the next few months.

The clearest sign that the economy has stabilized is the stabilization of the stock, and commodity markets. I agree that the stock and commodity markets are at severely depressed prices as compared to last year, but they have stabilized and since they are future gazing markets you have to trust their judgment that the worst of the crisis is over.

If the economy has stabilized then you/we/our elected officials have to let the recession happen. Companies have to constrict to regain their original footing. Companies have to get back to their basic business models.

If government wants to help then they need to help business find their footing not compete with them for resources. Isn’t that the great lesson of the great depression of FDR’s era. Government was hateful, harsh, and hampered the general business community.

What will $800 billion do to our economy? That is why President-elect Obama is having to sell his package to the legislative branch. He doesn’t know what it will do, he is already expecting trillion dollar deficits in the future. Those deficits will be competing with the business community’s need for resources.

Here’s my advice – stop selling stimulus packages and find ways to make businesses prosper. The government cannot employ the vast amount of  America workers. It will need the business community to do that for them.

The business community will need the recession to run its’ course. Don’t try to stop it, you can shoot for a softer landing, but don’t try to stop what must be done. The recession must continue for the next few months, President-elect Obama just has to accept that as a fact.

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16. December 2008 by David A. Peterson.

The view from the suburbs is that times are tough. Everyone knows that there are too many people chasing too few jobs at the moment.

 The government has stepped in, unemployment benefits are being extended. Medicaid programs at both the State and Federal levels are expected to grow dramatically over the next year. TARP’s and Automaker’s bailouts are all moving forward.

These types of social, jobs, economic, and entitlement programs will continue to balloon in the absence of serious job growth. The American taxpayer along with social and religious organizations will all step up to the plate to help those truly in need.

Suburbanites see the government trying to perform. You may agree with the government or you may hate every action being taken but you must admit there are a lot of people working overtime right now trying to arrest the economic problem.

What don’t suburbanites see in their viewfinders right now? The short answer is… trust. Especially trust in government.

Our stock markets and commodity markets are all built on the truth that economies expand. And if these future earnings and future prices don’t expand then the government has to help by using fiscal policy to keep the economy moving in the right direction.

But what happens if we can no longer trust those who we put in charge of our futures, our elected officials and those that they appoint to run the government? What happens when there is a lack of trust?

Look at Bernard Madoff’s $50,000,000,000 Ponzi scheme. Can investors really trust the SEC to actually regulate one of their own? How about Representative William J Jefferson (D-LA) and the cash in the freezer? Or Senator Ted Stevens (R-AK) receiving gifts and home improvements and not disclosing them.

Alaska has a tainted ex-Republican Governor, Illinois has one in jail. The list of those caught with their hand in the cookie jar just keeps getting longer. Democrats blaming the Bush Administration for the current economic plight while Barney Frank (D-MA) worked hard on getting lending rules loosened at a time when they should have been tightened.

Oh yea, let’s not forget about the ballots being found in a trunk of a car in Minnesota. How does Minnesota Senatorial candidate Al Franken sleep at night?

The McCain/Palin ticket may have missed the economic pitch this past election cycle but they hit the trust factor ball out of the park. Americans and the world as a whole are seeing and feeling the issue first hand with our shaky stock market and our shaky job’s market.

Trust in leadership?

 The American people are looking for a strong leader to get us out of this economic mess yet the President-elect already has strike one against him. Someone from his staff may have been in talks with Governor Blagojevich.  The Governor was just trying to sell the Illinois Senate seat and everyone knows that is no big deal for Chicago politics.

 Even if President-elect Obama and/or his entire staff had nothing to do with the current scandal in Illinois it still smells like they did.

What should the Republican Party do about this?

 Politically -nothing. This is normal Chicago politics. The view from the suburbs is “what do you expect?”  I don’t even live in Illinois but I expect that this is pretty much the way it is.  The FBI did its job and will prosecute to the full extent of the law. Rod Blagojevich will no longer be entitled to his governorship and may actually do jail time. Also, this scandal will dog the Democratic Party without any help from the Republicans.

 What should the Democratic Party do about this?

Politically -everything. Democrats have to realize that this smells. And if they allow it to grow by being secretive or not coming forward early with all of the facts it will dog the newly elected President. The country cannot afford a weak President right now. Democrats only need to look to the recent Republican past to find out what happens when the country doesn’t trust your judgment.

 The view from the suburbs is that times are tough. Suburbanites need to know that the government is capable of forming a plan without putting its individual members ahead of the taxpayers and the people who are truly in need.

 What else should the Republican Party do about this?

 The next national election cycle is only two years away. McCain and Palin correctly pointed out that there is too much corruption in government including the Republican Party. The RNC needs to find trustworthy candidates that are on top of the issues. I mean squeaky clean candidates that can bring a fresh voice to the issues and have innate problem solving abilities.

What else should the Democratic Party do about this?

For starters they could push for a special Senatorial election in Illinois. They could also do themselves a favor by not giving Caroline Kennedy her New York Senatorial birthright and showing the country that no one is entitled to an elected position.

 What will we be viewing from the suburbs?

Will the Democrats do the right thing? Reform government, stop the shady deals, stop political entitlements, and demand that regulators do their jobs? I doubt it, but luckily for the rest of us the next election is only 2 years away. Hopefully the people truly in need can hang on until then.

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