Stimulating poverty

It isn’t surprising to learn that the number of people living below the poverty level saw a massive increase in the US over the past two years. Given that successive administrations, both Republican and Democrat, have continually promulgated policies that have had the opposite of their intended effect for the past quarter century, it is surprising that the poverty figures aren’t higher! What’s more these policies keep getting more radical with each successive administration and their shortcomings are evident to everyone but the policy makers.

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Politicians are quick to blame others: Wall Street, bankers, greed, corporate incompetence, doctors, lawyers and all the usual suspects. But few policymakers look at themselves and their contributions to the economic malaise currently gripping the nation. The housing bubble was created as a direct result of government policies that began with Jimmy Carter and survive to this day. The US government is still making it possible for individuals to purchase a home with no money down by underwriting a mortgage through guarantees from Fannie Mae or Freddie Mac. Of course, both Fannie and Freddy will then attempt to minimize their exposure by packaging these junk mortgages into Byzantine financial instruments and pawn them off to institutional investors. But hey, who cares whether Fanny or Freddie is injecting poison into the veins of the American economy, so long as everyone gets to realize the American Dream of home ownership, regardless of whether or not they can afford it. When this bubble bursts, Uncle Sam will be there with his bailout money making sure that entities “too big to fail” don’t fail.

Correlation between government stimulus spending and the general rise in poverty

Then there is stimulus spending. It’s curious that so few members of the Administration see the correlation between government stimulus spending and the general rise in poverty. After dumping $787 billion of taxpayer money to “stimulate” the economy the result is that the jobless numbers actually exceed the number the stimulus was designed to avoid. This is a trend that has been ongoing since the introduction of Lyndon Johnson’s much-vaunted “War on Poverty” declared back in 1964. But rather than learn the economic lessons that continue to be imposed on the country’s hapless citizens, politicians are doubling down and now want to spend even more money to fight poverty by “stimulating” the economy further. All the while this is being done with borrowed money that the country has no chance of ever repaying. How about stimulating the economy by not fiddling with it through the imposition of reams of new rules, legislation and taxes and allowing American business to do what it does best—profit. The economy is moribund because of the Obama Administration’s incompetence. It’s tempting to speculate that Obama is imposing his brand of economics on the American economy because of some evil, hidden agenda. I suggest the truth is much more simple. Obama is in over his head and hasn’t got a clue what to do to turn things around. Business has stopped investing in expansion because of the uncertainty inherent in all the legislation that Obama and the Democrats are trying to ram down America’s throat. What will be the cost of healthcare? No one knows! How about Cap and Trade, how much will that cost? No one knows! How will the new financial sector legislation affect banking and related costs? No one knows! If no one can give a clear answer to these questions, then it only makes sense that American businesses are holding on to their cash and not expanding business activity. They would be just as foolish as Obama and his posse if they didn’t.

The Democrats are currently working on imposing a tax increase on the wealthiest sector of the American economy

The Democrats are currently working on imposing a tax increase on the wealthiest sector of the American economy. Forget the fact that upward of 40% of all taxes the government collects are paid for by less than 1% of taxpayers—the wealthiest sector of the economy, the people that create jobs and expand the economy through their activities. The tax increase is disguised as the cancellation of a tax cut, which was granted under George W. Bush. The rationale for imposing this tax increase in the middle of the worst recession in 80 years is that The Rich (You know, those people who pull up next to you in a limo asking if you happen to have any Grey-Poupon mustard) must pay their “fair share”. It’s easy to convince the great unwashed masses that making The Rich pay more because Obama and the Democrats foster the idea that if it weren’t for The Rich there would be no poor. But how to define The Rich is another matter altogether. Right now anyone making in excess of $250k per annum belongs to that group. However, if history is any indicator, The Rich will expand to include those making between $200 and $250 k, as the economy worsens and will likely expand right down into the middle class. Official Washington has a hard time understanding what motivates the Tea Party movement. The liberal elites are attempting to classify its members as knuckle-dragging, racist bigots with a Bible in one hand and a shotgun in the other. What’s really motivating the Tea Partiers is the arrogance of the political establishment, both Democrat as well as Republican. People are tired of having Washington fat cats tell them they need the government to protect them from themselves. As I see it, it’s the number one reason that people like Christine O’Donnell are winning primaries. So far the economic policies of both parties have done nothing but stimulate poverty. If those in Washington are allowed to continue on the present course, then the prediction that the US is heading for Third-World status will surely come true.