The Sad Truth About Obama's " American Recovery and Reinvestment Plan"

Many in the U.S and around the world had high hopes that there would be a turn around in the way Washington did business when the Obama administration took over on January 20, 2009.

Unfortunately, Washington machine politics has deep roots that remain and transcend the Presidency. The Obama cabinet and the Obama stimulus package, titled " American Recovery and Reinvestment Plan " are two examples of entrenched Washington politics. The 650+ page bill rammed through the U.S. House Representatives is nothing more then the consolidation of eight years of programs that went nowhere under the Bush Administration. Washington is master of resurrecting old programs, attaching flashy labels, and peddling them to the public as something they are not.

One doubts whether President Obama has, himself, read the 650+ bill the House passed on party lines. Congress, now controlled by Democrats, is no more capable in "getting it right" then when the Bush Administration was at the helm. Both the 110th Congress and the current 111th Congress are throwing massive amounts of borrowed dollars, and HOPING something sticks, to bring the U.S. out of the economic meltdown we all face. Congress hopes to accomplish a turn around without making any structural or systemic modifications to a financial system that has failed. Without modifying the Federal Reserve system in place since 1913; without instituting specific restrictions and regulations on banking, financial services, business consolidations and entering into international compacts with G8 nations and central banks to stabilize currency fluctuations and interest rates, the Obama plan will accomplish little, except to spur inflation and increase the cost of consumer goods and services.

The U.S. burdened by arcane procedures, entrenched ideologies, and politics, have doomed main-street USA to hard, very hard times for the next 4+ years. The Obama/Democratic Washington steam shovel has started to dig the hole much deeper by cranking up the printing presses and doubling the already mega-strophic national debt; soon the U.S. dollar will be at par with third world currencies.

CHINA SYNDROME

Corporate greed and undue Washington influence jump started the parade, shipping U.S. jobs and technology offshore. The Nixon administration opened the doors for corporations in China; following administrations, and Congress, long noted for it's myopia, passed NAFTA and other "Free Trade " agreements emasculating U.S. manufacturing and production capabilities, and U.S. employment. Now the nascent Obama administration, through Timmy Geithner the new Secretary of Treasury, is blaming U.S. economic woes on China's failure to re-value the yuan per U.S. "demands".

China and the value of the yuan are not the problem, U.S. corporate and financial interests influence on Congress, coupled with the inherent shortsightedness of our 535 federal legislators is where the root of the financial crisis rests. The Obama stimulus plan, illustrates that the U.S. government has no real clue how to fix the cascade into depression, 15% unemployment, and the hardships U.S. main-street is facing over the next 4 + years.

There is nothing to be gained by bad mouthing China. The U.S. made China, at first reluctant, a partner in the plunder of cheap labor to fatten the gluttony and greed of U.S. corporate titans. Now China is not just a partner for the production of goods, but the banker of the U.S.. Now is not the time to get on a high-horse and criticize China. From a political and structural standpoint, China is better suited to effectively respond to "crises " then the cumbersome system the U.S. has to wade through. The U.S. is poised to float the most massive debt in the modern world. Who is going to "buy" the debt of a country that produces arms, munitions, the instruments of war, and that invades others at will; but has little else to offer ? The only hope the U.S. has is that China, and other Asian nations will continue to buy U.S. debt obligations.

It would be much wiser, to work with our partner, China, and develop practical plans that would be beneficial to both countries, and forget currency valuations. Example, assign U.S. creditor interests in G.M. and Chrysler to China - when G.M and Chrysler, or Ford, ask for more bail-out funds, refer them to China. It would be in the mutual interests of both the U.S. and China, for China to produce parts for cars assembled in the U.S. for U.S and China markets. The U.S. can't take back all the jobs that Congress has allowed to be exported, but we can work with our partners abroad, to have a two-way, as opposed to a one-way, street.

The Obama administration has had one hell of a load of crap dumped upon it. It will take more then hope and a prayer to make any headway and start to dig out from under this pile. Now is not the time to start poking at China.

Timed Tax Incentives NOT stimulus NEEDED

- HASTE MAKES WASTE -
* NO TO STIMULUS/ *** YES FOR TIMED TARGET TAX INCENTIVES

Opinion by Donald D. Holmes

Let's face reality, Congress has no clue in how to get the U.S. out of the financial melt-down and mess the U.S. is faced with. All eyes are on President elect Obama, in hopes that he and his new administration have" life boats" at the ready to rescue folks as the U.S. ship continues to sink.

Stimulus is a word that inspires hope, but hope and a prayer will not signal "turn around" any more then the Bush stimulus and $700 billion bail-out of Wall-Street/ AIG/ Banks, and now GM & Chrysler, have.

First, there has to be a re-structuring of the Federal Reserve and U.S banking system. Following a re-structuring that includes the elimination of the position of Chairman, credit-card interest and fee limitations [ 13% max; 12% interest and 1% total fees/late charges etc. included ] need to be imposed nationwide.

Next, Congress needs to terminate, rescind and revoke Public Law 110-343
( $700 billion Wall-Street Bail Out ), Public Law 106-554 ( Commodities Futures Modernization Act ), and to enact legislation designed to stabilize financial markets by prohibiting the sale or transfer of securities held for less then 13 consecutive calendar months.

The Home Foreclosure Crisis, can be mitigated by adopting a mandatory “Rent to Own” program whereby non-performing ( residential homes in default ) assets can be converted to income assets, i.e., title is transferred to the bank, Fannie, Freddie, and a lease/rental with option to purchase is executed by the homeowner.

Timed Target Tax Incentives, instead of a “Stimulus”, are needed to right the U.S. ship. Neither Congress nor the incoming Obama Administration have the capacity to effectively oversee the expenditure of $800 billion dollars of taxpayer/treasury funds. Look at the $700 billion [ Pub. Law 110-343 ] bail-out boondoggle. The Government cannot spend it’s way out-of-a recession or depression. What Congress and Administration can and should do is it make
specific changes to the IRS code, limited to 3 years [ 2009, 2010, 2011 ], that would allow individuals to write off their losses, and business to write off it’s losses against income. Further, provide dollar-for-dollar tax credits to individuals and businesses that modify houses, offices, plants and equipment ( vehicles ) to use alternative fuels ( e.g., CNG, solar etc. ). Such tax incentives need to be applied across the board to individuals as well as business. There
are and have been CNG conversions for both cars and trucks on the market for
many years. With tax credit incentive, individuals and businesses could convert
existing vehicles to CNG ( clean air vehicle fuel ), and service stations and homeowners could install the necessary compressors and equipment to re-fuel the converted vehicles.

In order to fill employment gaps created by the downturn, Congress can and should extend unemployment benefits for a full 52 weeks, 1 year. Regardless of what action is taken or not taken, there will be substantial employment displacement ( unemployment ) for the next few years. Both Congress and the Obama Administration need to man-up to this reality, and act to mitigate the consequences by extending unemployment benefits.

WILL U.S. FALL APART IN 2010 ?

Recently the Wall Street Journal ran a piece about Russian Professor Ignor Panarin's 1998 prediction that the U.S. would virtually disintegrate in 2010. One's initial reaction is to laugh, but, on second thought, it may be informative to hypothesize a bit before dismissing Prof. Panarin's premise entirely.

There is no need to detail the fact that the U.S. is facing the most severe financial crisis in it's history; a crisis that has had a global impact and implications. So what about 2010 or 2012 ? It may well be that the U.S. Dollar, by 2010, will no longer be the world standard for finance.There has been movement to shift oil pricing from the U.S. Dollar to the Euro. Oil and Natural Gas for many years into the future will be the base resource for industrial growth and survival. Electricity production, and heat for habitation will be dependent on these two primary natural resources. Just by shifting the pricing of oil to Euros, the U.S. dollar would be devalued by
33%.

What does this mean for the U.S. lets look at some current facts, an forget about Wall-Street. Virtually every continental ( exclude Alaska and Hawaii ) State ( 48 ) in the U.S. is in the RED. The shortfall in California is estimated to be in the neighborhood of $43-45 billion. Washington has no funds to cover State deficits, so who an how are the municipal and other State bonds
( outstanding debts ) going to be paid ? So much for the borrowing capability of States. The global market of municipal, State and U.S. Federal debt just got more expensive. As an investor, how much of a change is one willing to take for a 6%, 8%, 10%, 12% possible non-return ? If the municipalities, State and Fed's can't squeeze it out of citizen taxpayers, where is the money to pay the interest on the debts going to come from ?

Compounding matters for States in particular, is the burgeoning expense of providing basic services. Citizenship is not a requirement for welfare, medical care, education etc. So as states cut other services, police, fire protection, road maintenance etc., the costs of welfare sector services will continue to rise ( as unemployment increases, the demand for welfare sector services will also increase ). In short, most local and State governments are bankrupt. Does State bankruptcy result in the break-up of the United States ? Who knows, perhaps Professor Panarin's views on the future U.S. are not so far fetched.

WHAT IS GOOD FOR G.M. IS NOT GOOD FOR U.S.A.


It is difficult to let go of the past, but the " good old days ", as some would say, have been gone forever. G.M., Chrysler and Ford represent the past, and have gone the way of the " Wild West ". Public consensus has moved on, yet the U.S. Congress is bogged down with past memories of glory days in large part do to the lack of a term limits amendment and the promotion of members based on seniority as opposed to competence. Congress does not "get it"as best illustrated by the passage of the $700 billion Wall-Street Bail-Out opposed by main-street U.S.A. And where did the $700 billion get main-street, deeper in debt.

For the past two years, main-street has known the U.S. is in a recession, duh; but Congress and the Administration are still struggling to recover from a drug induced haze, and admit what has been common knowledge for well over a year. Now, these masters of the universe are jaw boning with the rich and now infamous CEO's of what once were the Big 3 ( G.M., Ford, Chrysler ) U.S. automakers about what can be done to insure the survival of these white elephants. Think of it this way, if the CEO's and really knew their stuff, they would not be before Congress asking for a now $34 billion, soon to be a $75 billion and who knows, maybe a $125 billion or more taxpayer life ring. It's a blind leading the blind scenario, that spells disaster for main-street and the U.S. taxpayer. You would think at least one of the congressional committee heads would query: Where are the CEO's of Toyota U.S.A. and Honda U.S.A. ? You don't see these guys seated at the table asking for a Taxpayer/Congressional Bail-Out.

Thank Congress for GATT and NAFTA, good U.S. jobs are hard to find. The masters of the universe in Washington sent good U.S. jobs offshore with typical lack of foresight and to insure the lavish lifestyles of corporate execs. Congress loves to talk about main-street, but shuns associating directly with main-street. As before, main-street does not want to bail-out the once Big 3 , now Detroit-3, and yet Congress is hell bent for leather, to keep feeding these dead horses. Feed the walking dead and they will cut lose over 100,000 rank-and-file workers; don' t feed G.M and Chrysler and you will lose over 100,000 rank-and-file workers; it's a zero sum for workers no matter what Congress does.

Congress does not have it's house in order, let alone trying to craft a plan for the survival of the terminally ill Detroit-3 automakers. The Detroit-3 proposals are 48 years to late; this is 2008-9, not 1960. In 1960, when it was apparent that foreign auto makers were making impressive inroads in U.S. markets, had the then still Big-3, joined the reality train and re-structured at that time, they would not have become the walking dead Detroit-3 of today.

Congress should let the chips fall where they may; stay out of the fray. The U.S. public. main-street U.S.A. have become accustomed to taking it in the shorts from big corporations and Congress; we will adapt and survive, no thanks to Congress.

A SINKING SHIP - SAGA OF THE U.S. ECONOMY

Main-street U.S.A. has long been aware that there were big troubles brewing in the economy. The how's and why's were not apparent, but rising prices, zero or minus wage gains and cut-backs in hours were signs main-street recognized as being "not good". Mediocrity was pervasive at the executive levels of corporate America, coupled with the mediocrity of Congress. The most prized positions in corporate America, those with title, disproportionate incomes, perks and outrageous bonuses, not for performance, but because of connections, had much to do about the collapse of the U.S. economy. Congress aided and abetted the collapse by its arcane rules promoting those with longevity to committee chairs regardless of competence in the subject area of the committee. The reluctance of Congress to pass a term limit amendment was and is the breeding ground where the brightest 10% of members are virtually drowned by the 90% who are incompetent. The same holds true for the captains of corporate America. Add to the mix a team captain who was not playing with a full deck, George Bush, and it's know wonder the true colors of those raping the system were not sooner exposed.

Adding insult to injury, main-street U.S.A. is still paying the price for this combined corporate and government incompetence. Businesses continue to close, unemployment accelerates, and all the while Treasury Secretary Paulson continues to loot the U.S. Treasury so corporate executive rapists can continue their glutinous ways. Those in the U.S. possessed with a modicum common sense have to be asking: why throw good money after bad ? why pay and essentially reward bad behavior and poor performance ?. That is what is being done by giving billions of taxpayer dollars to the corporations and executive management teams that got us in this mess in the first place.

Chapter 7, not Chapter 11, is where AIG, the financial firms, and others in the bail-out line should be. Why prolong and aggravate the pain for main-street by first looting the U.S. Taxpayer/Treasury ? A very few, very rich, are the only beneficiaries of Congresses myopia. The election of Obama was main-streets signal to Congress that the public wants a NEW GAME, not simply another quarterback. Corporate America, Wall-Street and Congress have to quit their addiction to "trickle-down Reaganomics ". Yet, there is no sign that Congress is willing to take the "throw cash" needle out of their arms and consider unique solutions to the problems they have had a heavy hand in creating, e.g., Public Law 106-554 Sec.1(a)(5), the Commodity Futures Modernization Act.

Congress can't seem to grasp a very simple concept: jobs, good jobs are the foundation of a sound economy. Who should be funded, bailed-out, at taxpayer expense; it's a no brainer - the middle-class, main-street taxpaying U.S. citizen. HOW, by extending fed rate ( the rate banks pay the Fed to borrow money ) funds to the major Unions and employee groups, like the UAW, for the purpose of purchasing the plants, equipment and other assets of bankrupt corporations, the likes of G.M., Chrysler and/or Ford. Employee owned corporations are not that novel of an idea. The loss of jobs, only temporary, and can be adequately covered by extending unemployment benefits. The U.S. taxpayer is paying, and should be getting some direct benefits. Congress, and it appears, soon to be President Obama, may be sticking their heads in the sand, by continuing to beat the existing bail-out/stimulus horse to death. Main-street deserves more from the "Master's of the Universe".

If the sinking ship has any chance of being saved, it will be by taking a completely different approach: Congress promoting and funding Union and Employee owned corporations formed to purchase the assets of Chapter 7, corporations; and cutting off all bail-out funding to the likes of AIG and others lining up for Treasury Bail-Out funds. Corporations that require taxpayer bail-out funding to exist should be allowed to fail, that is why there is Chapter 7, of the U.S. Bankruptcy laws.

U.S.A. - a Ntion in Peril

The political and economic hurdles facing the U.S. are intertwined. The U.S. is a "class" society as indicated by the recent "financial" crisis created in and by the U.S. ultra rich "Wall-Street" class. The U.S. Congress passed "bail-out" legislation over the objection of the majority of main-street citizens, benefiting "Wall-Street" to the tune of over $700 billion U.S. dollars, slapping democracy in the face and merely paying lip-service to the struggling and diminishing U.S. middle-class. "Wall-Street" greed has infected world economies, resulting in a world economic crisis calculated to diminish the U.S. middle-class, and emerging middle-classes world wide .

In the U.S. the class struggle will take center stage during the upcoming U.S. Presidential election; stripped of rhetoric U.S. Republicans represent "Wall-Street" and the Democratic party represents middle-class "main-street". An anomaly in the U.S. Constitution [ adopted in 1789 ] precludes the President of the U.S. being selected by popular vote of the people. This anomaly coupled with a corrupted U.S. judicial system skews the election of the U.S. President in favor of "Wall-Street" Republicans, by eliminating over 49.9% of the popular vote and highlighting the fact that the U.S. was not created or structured as a "democracy". Regardless of who becomes the U.S. President, 2009-2012, the electoral anomaly will continue to cripple the U.S. in asserting the principles of democracy at home and abroad.