Dakota Beacon

So many -illions. Millions. Billions. Trillions. What’s next? Try quadrillion. That would be a “1” with 15 zeros behind it. Get used to it. It will soon be part of our lexicon.

President Obama submitted his 2011 budget on February 2. In a word, the president wants to spend $3.83 trillion in 2011 creating a deficit of $1.27 trillion and increasing the national debt to $15.1 trillion.

Obama can play IBF (it’s Bush’s fault) only so long before sounding ridiculous. After a year in office and with his own budget submission creating havoc, he owns the economic malaise. The least he can do is accept responsibility.

It’s not inappropriate to point out that Senator Obama voted for every budget proposal Bush sent to congress. Therefore, President Obama is complicit in any debt or deficit we face.

The effect of congressional meddling is easy to grasp. Spending without financial resources causes a deficit. Congress is famous for this. With no one to buy our debt congress must raise taxes to finance the shortfall. Taxes stifle business. A shrinking business environment generates unemployment in the private sector. An expanding government creates government jobs, but it must raise taxes even further to pay the public employees thereby compounding the problem.

Meanwhile, no new wealth is created although old wealth is consumed. The argument that “stimulus” money will “stimulate the economy” is deceiving. True, it puts money in the hands of people who will spend it, but money going around in circles creates no new wealth. Only the private sector effectively creates new wealth. Government consumes it. When stimulus money runs out and the private sector cannot sustain growth, then what?

We’ve seen it all before during the Franklin D. Roosevelt era. Historically, and with 20/20 hindsight, it is undeniable that the hero of that era, which Obama seeks to emulate, prolonged the Great Depression far longer and deeper with government intervention that it would have without it.

After Obama delivered his budget, it’s now congress’s turn. Typically, when congress finishes adding their earmarks, it inevitably exceeds the president’s proposal. Dollars to donuts North Dakota’s congressman and senators will vote for much more spending than Obama proposed. And Obama’s proposal was obscene.

Senator “Lame Duck” Dorgan has no reason to vote against any spending measure. After November he will no longer be accountable the North Dakotans.

Candidate Pomeroy, in an attempt to cover up his votes for health care and cap and trade, has raised a populist howl over AIG contractual bonuses as if that were enough to divert attention.

Senator Conrad, though not up for re-election until 2012, is already tip-toeing through the minefields playing a confidence game with constituents. On February 4 the “Wall Street Journal” ran a front page story explaining how he is a deficit hawk in Washington and a spendy dove for North Dakota. Watch Conrad’s earmarks in spite of the indignation he voiced upon receipt of Obama’s budget in his Budget Committee.

Obama consciously models his presidency after Franklin D. Roosevelt. Statistics to the contrary, FDR’s image remains that he saved America from the Great Depression. Arguably, FDR’s Great Depression was not a manmade disaster, but unquestionably FDR prolonged the depression through his policies. Deficit government spending generated tax increases leading to greater unemployment. We’ve seen it all before.

FDR created some institutions that may have helped during the depression. We can debate the effectiveness of the Security and Exchange Commission as well as reform of the Federal Reserve system.

Other creations such as the National Recovery Administration definitely hurt the recovery through price setting. The Tennessee Valley Authority killed the private electric utility initiative underway through the Commonwealth and Southern Power Company.

FDR was committed to economic experimentation. A combination of tax hikes and union strikes, both a direct result of Roosevelt’s policies, prevented companies from hiring workers and prolonged the depression. The uncertainty generated by unpredictable policies from New Dealers stifled business growth and expansion.

FDR’s budget doubled between 1931 and 1938 while concurrently unemployment climbed. The CCC and WPA destroyed jobs in the private sector by creating make-work jobs in government. Unemployment peaked in 1933 at 25% and only dropped to 17% by 1940.

From 1929 to 1940 a struggle ensued between the public and private sectors of the economy. The private sector dominated in the beginning, the public sector dominated at the end.

Unlike today’s global warming scam, Obama’s recession is very much manmade. Sadly, it doesn’t have to be this way.

Dennis M. Patrick can be contacted at P. O. Box 337, Stanley, ND 58784 or (JavaScript must be enabled to view this email address).