Posts Tagged ‘debt crisis ignored’

It takes brains to bargain effectively

December 1, 2012

My principal concern about President Obama since his 2008 election victory is that he is unfortunately endowed with a low intellect. To put it bluntly he does not possess the  grey cells required for the position that he occupies. As so often happens, he has been promoted beyond the level of his abilities.

The evidence is there for anyone who takes the time to research for it.

A senior student editor of the Harvard Law Review who fails to publish an article in the Harvard Law Review during his period of tenure is either under-motivated or under-skilled. No one claims that Barack Obama is under-motivated.

A faculty member at the University of Chicago who fails to publish even one scholarly paper in ten years is either under-motivated or under-skilled. No one claims that Barack Obama is under-motivated.

A faculty member of at the University of Chicago who cannot converse with the conversationally brilliant Richard Epstein once in ten years in the faculty common-room quite frankly is completely out of his intellectual depth, as any one who has ever met Richard Epstein will know well.

A President who has not prepared a policy proposal on any issue over a four year spell in the White House is either lazy or under-skilled. Barack Obama claims to be hard-working. If we allow him the benefit of the doubt in that dimension, then the skill issue once again is on the table.  Every policy legislated into law over the period 2009-2012 was prepared by senior  Democrats in Congress.  Obama simply egged on his colleagues from the golf courses, basket-courts and the campaign trails of the nation.

So now, in December 2012, when the fiscal cliff threatens to abort a stuttering American economic recovery, what do we find?  Predictably, President Obama prefers to squeeze flesh in states marginal to the Electoral College, parroting half-baked policy utterances that won him election among a largely ignorant electorate.

You do not hold all the cards of power in your hands, Mr. President. The electorate, even in its ignorance, did not cede to you control over the House of Representatives. That body is the legislative engine of the nation, not the White House. To resolve a major fiscal crisis requires that you bargain intelligently with the Leader of that House.

By demanding $1.6 trillion through tax hikes now, in return for a promise to work in the future for $400 billion in expenditure cuts, you admirably demonstrate the low quality of your intellect. That is a tax and spend proposal in an environment where everyone but you understands that public expenditures are seriously out of control.

If you are not up to this job at this moment in time, why not take more time out on the golf course and allow an experienced Democrat with the necessary intellectual horse-power to take over the bargaining role . Bill Clinton, I am sure, would be happy to oblige.

And the nation would be immensely relieved to see a real President sit down with the Speaker of the House before Christmas 2012.!

Obama does not cut the budgetary mustard

February 14, 2012

I have suggested for some time that President Obama is completely overwhelmed in his role as President. He lacks the basic intellectual skills and work ethic  to analyze problems rigorously and to find effective resolutions.

This inability impacts every aspect of his responsibilities, both domestic and international. It is a sad commentary on the dominance of personal ambition over concern for the people that he has decided to run for a second term. For, without question, President Obama now understands that he simply does not cut the presidential mustard; and never will.

The President’s proposed budget for October 2012 quite frankly is a disgrace. It demonstrates a complete lack of understanding of the nature of the debt crisis that confronts the United States and offers nothing whatsoever towards resolving the long-term problem.

The chronic long-term debt problem arises because public expenditure, at some 25 per cent of GDP, is five percentage points higher than it should be for a vibrant mixed economy and because tax revenues, at 15 per cent of GDP, is five percentage points lower than it should be for a country with an aging population.

The principal drivers of excessive expenditure are the three major entitlement programs: social security, medicare and medicaid, together with the flawed Obamacare program that will begin to exert its impact in 2014. These programs require radical attention, if the debt crisis is not to become a Greece-style debt black hole within the next ten years. President Obama does not address this issue at all in his proposed budget.

Tax reform is essential if increased tax revenues are not to serve as a long-term drag on the U.S. economy.  A solution close to a flat tax at rates capable of generating sufficient federal revenues is feasible and even politically attractive. Instead, the President chooses to wage war on the most productive members of society. History should tell him that such assaults are rarely effective.  The relative price of tax avoidance falls sharply as marginal tax rates rise.

Worst of all, the President has created a proposed budget that has a zero probability of  being enacted into law during the final year of this administration. President Obama’s proposed budget is not a budget proposal at all. It is designed as political red meat to lure disaffected left-wing supporters to the polls in November 2012.

 The proposal, fortunately,  is dead on arrival in the the U.S. Congress, the Senate as well as the House. Whether or not President Obama is politically dead on arrival at the November 2012 polls depends on the good sense of the  electorate.

With a President like Barack Obama, the United States would be far better off with a Westminster-style parliamentary system.  At least, the British coalition government quickly identified the debt crisis that it inherited and moved to eliminate it. Obama has been in office now for three long years, and has yet to identify the nature of the beast.


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