WSJ: Obama and the Economy

The Wall Street Journal had an excellent opinion piece in regard to the President and his advisors and their economic policies. One of the most telling items was in the subtitle:

As the Dow keeps dropping, the President is running out of people to blame.

This was no partisan screed. It was documentation of the impact that Obama's policies are rapidly having on the only economic indicator that can react to events close to when they occur.

As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

While it is clear that Nancy Pelosi and Harry Reid along with the Obama Administration have incited absolute class warfare. The problem is that they are doing it by scaring away the people they will need to fuel the programs they insist are so important. And what's worse is that they are hiding behind the economic situation to push their agenda through hoping that no one is noticing. But the market is clearly paying attention.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

Read the entire article here.

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