ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist®.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style2 { font-size: large; font-weight: bold; font-family: Arial; } .style3 { height: 69px; } .MsoNormal {} h1 {margin-bottom:.0001pt; page-break-after:avoid; font-size:12.0pt; font-family:"Times New Roman"; font-weight:normal; text-decoration:underline; text-underline:single; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style4 { font-size: x-large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> <table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr height="79"> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"><a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" height="79" colspan="2" valign="top" align="left" xpos="140"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" height="79"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#8226; <a href="articlesindex.html">ARTICLES</a> &#8226; <a href="books.html">BOOKS</a> &#8226; <a href="teflon.html"> THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#8226; <a href="mailto:letters@onlinecolumnist.com"> REACTIONS</a> &#8226; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2">&nbsp;</td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style2">Barack&#39;s Battle Royale</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright March 1, 2009<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="style4">&nbsp;B</span>arely passing his life-saving $787 billion recovery plan, President Barack Obama threw down the gauntlet pushing a $3.55 trillion budget, hiking the deficit to $1.75 trillion.<span style="mso-spacerun: yes">&nbsp; </span>With the deficit half the size of the total federal budget, Barack s ambitious spending plans got a lot more difficult, arguing that it s what the voters wanted.<span style="mso-spacerun: yes">&nbsp; </span>While he told a national audience Feb. 22 that all must sacrifice, the White House showed no penchant for compromise on what amounts to staggering government spending, not seen since Presidents Franklin D. Roosevelt s New Deal or Lyndon B. Johnson s Great Society.<span style="mso-spacerun: yes">&nbsp; </span>At a time of stunning bank failures, Obama decided to cut subsidies to farmers, increase taxes on corporate polluters, raise taxes on the wealthy and overhaul the nation s beleaguered health care system.<span style="mso-spacerun: yes">&nbsp; </span>Obama calls his budget one of the future but some see it as a nightmare.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>White House Office of Management and Budget Director Peter Oszag promised to cut the ballooning federal deficit in two by the end of Barack s first term.<span style="mso-spacerun: yes">&nbsp; </span>He s calculating an average Gross Domestic Produce growth rate of 4%.<span style="mso-spacerun: yes">&nbsp; </span> Today s growth rate hit negative 6%, far from what s needed to close the growing gap between government income and expenses.<span style="mso-spacerun: yes">&nbsp; </span> I realize that passing this budget won t be easy, said Obama, because it  represents a threat to the status quo in Washington.<span style="mso-spacerun: yes">&nbsp; </span>Actually, budget deficits are the  status quo, questioning the very real possibility that Barack s spending plans would explode an already intolerable deficit.<span style="mso-spacerun: yes">&nbsp; </span>Orszag believes the economy s health stems from overhauling a dysfunctional health care system.<span style="mso-spacerun: yes">&nbsp; </span> While health care certainly needs some work, today s financial meltdown is far more related to banks risky stock market investing.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Banking lobbyists pressured Congress in 1999 to jump on stock market bubble, ending the 1933 Glass-Steagall Act that formed the Federal Deposit Insurance Corporation and prohibited banks for stock market investing.<span style="mso-spacerun: yes">&nbsp; </span>Nearly 60 years after Glass-Steagall, banks failed again for exactly the same reason:<span style="mso-spacerun: yes">&nbsp; </span>Risky stock market investing.<span style="mso-spacerun: yes">&nbsp; </span>So-called  derivatives or sliced-and-diced collateralized mortgage obligations went bust when the real estate bubble burst, leaving them essentially worthless.<span style="mso-spacerun: yes">&nbsp; </span>Financial institutions at home and abroad suffered devastating losses, causing the recent run-on-the-bank that evaporated banks liquidity.<span style="mso-spacerun: yes">&nbsp; </span> Today s banking insolvency, preventing credit from flowing to businesses and consumers, has prevented economic recovery.<span style="mso-spacerun: yes">&nbsp; </span>No one thinks Orszag s rosy income projections can happen without robust consumer spending.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Liberal groups hailed Obama s budget after eight years of President George W. Bush.<span style="mso-spacerun: yes">&nbsp; </span> We re struck with ho bold and courageous a budget it is, said James Horney of the liberal Center on Budget and Policy Priorities, excited by Barack s new proposals but worried that he ll encounter too much resistance.<span style="mso-spacerun: yes">&nbsp; </span>While Bush is remembered most for the Iraq War and deteriorated economy, Obama doesn t want to be known for exploding deficits.<span style="mso-spacerun: yes">&nbsp; </span>Given the state of the economy, winning concessions on his economy recovery plan was a necessary first start.<span style="mso-spacerun: yes">&nbsp; </span>Instead to expecting everything at once, the budget should reflect the need to reduce the deficit and control government spending.<span style="mso-spacerun: yes">&nbsp; </span>There s absolutely no reason to threaten cash-strapped businesses for caps on greenhouse gasses when that could wait until the economy recovers.<span style="mso-spacerun: yes">&nbsp; </span>Health care reform isn t, as Orzag insists, critical to the banking crisis.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Most economists believe budget deficits threaten economic recovery by forcing the government to compete for cash in private capital markets.<span style="mso-spacerun: yes">&nbsp; </span>Past deficits have pushed up interest rates, causing inflation in the financial sector.<span style="mso-spacerun: yes">&nbsp; </span>With federal deficits now running nearly 12% of GDP, there a real threat to economic recovery.<span style="mso-spacerun: yes">&nbsp; </span>Past economic cycles including former President Bill Clinton s relied on asset  bubbles to reduce deficits.<span style="mso-spacerun: yes">&nbsp; </span>Clinton s budget went into surplus because of the dot-com bubble, boosting the Dow from 5,000 in 1995 to 12,750 in March 2000.<span style="mso-spacerun: yes">&nbsp; </span>More that doubling the Dow in five years boosted government s tax revenues, erasing deficits, balancing the budget and eventually creating surpluses.<span style="mso-spacerun: yes">&nbsp; </span>Without another asset bubble, it s highly doubtful Obama can make up today s record deficits.<span style="mso-spacerun: yes">&nbsp; </span>Only by scaling back spending can Barack expect to reduce the skyrocketing shortfall.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Obama s main goal should be to fix the nation s disabled banking system, making credit to worthy consumers and businesses available again.<span style="mso-spacerun: yes">&nbsp; </span>Only by improving the nation s cash-flow can the White House expect to improve GDP.<span style="mso-spacerun: yes">&nbsp; </span>Pushing now for national health care, caps on greenhouse gasses and other costly programs must get in line behind urgent priorities.<span style="mso-spacerun: yes">&nbsp; </span>No one knows how much cash it will take to stabilize U.S. financial markets.<span style="mso-spacerun: yes">&nbsp; </span>One thing s for sure:<span style="mso-spacerun: yes">&nbsp; </span>No other priority no matter how worthy can take precedence over fixing the U.S. economy.<span style="mso-spacerun: yes">&nbsp; </span>With all the new spending, Orszag can t be serious about cutting the deficit in two by 2012.<span style="mso-spacerun: yes">&nbsp; </span>Obama  appears to move in exactly the wrong direction.<span style="mso-spacerun: yes">&nbsp; </span>More taxes, heavy-handed regulations, and command-and-control government will not hasten recovery. . . . You don t build a house by blowing up its foundation, said the U.S. Chamber of Commerce, concerned that too much government spending could hurt the recovery.</p> <p class="MsoNormal"> John M. Curtis writes politically neutral commentary analysing spin in national and global news.&nbsp; He&#39;s editor of OnlineColumnist.com and author of <a href="books.html"><i>Dodging</i> <i>The Bullet</i> </a>and <i> <a href="books.html">Operation Charisma</a>.</i></p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Home</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> || <a href="articlesindex.html">Articles</a> || <a href="books.html">Books</a> || <a href="teflon.html">The Teflon Report</a> || <a href="mailto:letters@onlinecolumnist.com"> Reactions</a> || <a href="aboutdiscobolos.html">About Discobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>