Frank Donatelli say We’re looking like France,
President Barack Obama’s Democrats have set out to alter fundamentally the nature of the U.S. political system. The changes they’ve wrought will not be easily undone.
Obama has sought to remake America into a social democracy — like Germany or France — with a larger public sector, expanded entitlements, stronger labor unions and a changed political structure. He’s doing quite well so far.
Size of government. Are we really still a government of limited powers at the federal level? It’s hard to make that case.
The feds are running auto companies. They fired the General Motors board of directors and forced Chrysler bondholders into a settlement far less attractive than that given the United Auto Workers, strong allies of Obama.
The Bush administration devised the Troubled Asset Relief Program, but the Obama administration has extended it once already, and Treasury Secretary Timothy Geithner has proposed keeping the $700 billion open as a line of credit to fund expanded government programs.
Obama’s stimulus plan, combined with his amended 2009 budget and his 2010 and 2011 spending plans, have pushed annual deficits to more than $1 trillion per year.
Entitlement expansion. Obamacare has passed and is lurking in our federal and states’ budget futures. When the program is fully operational in 2014, federal spending for health care is expected to rise sharply. Many businesses could drop their coverage and force workers into the public “exchanges” created by the legislation. Millions more could be eligible for federal subsidies.
All of these are bad for the economy.
How bad is the economy? “A complete disaster,” says Howard Davidowitz:
Davidowitz contends that the President’s spending, including the health-care bill, is creating massive deficits that will take the U.S. years to dig itself out of. “He is Mr. Mass Destruction,” Davidowitz says of Obama. “I mean he is a human destroyer. This guy has spent his way into oblivion and we don’t have a budget. He is surrounded by a bunch of complete incompetents, led by himself. ”
Housing Gloom
As far as the actual economy goes, Davidowitz’s chief concern is the strained state of the housing market, from which the bad news continues to pour in. According to Davidowitz, Americans are facing an $8 trillion negative wealth effect from the bursting of the housing bubble.
“We’re talking about some serious money here,” Davidowitz exclaims. “I mean this is a complete disaster and that’s why we are going to have a double dip. We’re guaranteed a double dip in housing.”
Small Businesses and UnemploymentDavidowitz says that the job market is also in ruins, noting for every new job there are six applicants. As a result of the intense competition for positions, employers can offer lower wages. Young people entering the work force today can expect to make less money in their lifetime than previous generations.
Considering the majority of new jobs are created by small businesses, Davidowitz argues that new regulations governing loans to small businesses are only making matters worse — both for the entrepreneurs and the millions of people out of work.
“We have this insane new regulation,” Davidowitz says. “Community banks will not even be able to fill out the forms. They’ll pack up and quit. They’re already underwater. Commercial real estate is still terrible.”
The Future a Massive Struggle
Asked whether he thought the U.S. would experience another Great Depression, Davidowitz said the coming years will look more like Japan today vs. the U.S. in the 1930s.
People will be making and spending less money and the nation as a whole will be dealing with the consequences of the deficit, he says. “We are in a struggle, day by day it’s ugly. At the core, when we look at our debt, we are going to have to deal with it.”
It’s not going to get better any time soon, either.
