Wednesday, August 05, 2009

Trickle Down Economics, Obama Style

The major irony in what the Obama administration has done with the financial world is that its the ultimate in "Trickle Down Economics." I guess Ronald Reagan would be proud.

The major difference between the financial rescue programs of Roosevelt "New Deal" economists is in who were the intended beneficiaries and what the spent government money would create.

The New Dealers did not bail out the bankers and the banks wholesale as Obama did, just the opposite, they gave security to the bank's depositors in federal insurance on their money, not the bank's capital. They gave credibility back to banks by making sure no one confused an insured bank with an uninsured stockbroker, or insurance company. Now, some may not have agreed with the approach, but the Democrats in those days did target the common folks first, not the big players.

Where they did make big deals, the deals were so big and so comprehensive that their was no way they would not have long-term positive effects and benefit the largest possible number with visibility. The dam projects, the TVA, the massive federal buildings and courthouses that are still in use to this day in their original configuration were most often masterpieces of planning and execution and kept many employed for years doing things no one could deny were having a long-run impact on society. In some cases the federal government quietly backed loans to private industry if the project would have enough long-term public use and keep unemployment down in specific areas. The electrification of the Pennsylvania Railroad from New York to Washington and west to Harrisburg was such a private industry project with a public benefit. The Roosevelt administration kept its participation in that one fairly quiet as the Railroad was run by Republicans, the banks whose loans they guaranteed in Philadelphia were run by Republicans, and a significant number of workers who benefited were Republicans, as Philadelphia at that time was blue-collar Republican town.

Obama and his folks gave your big tax money to the reckless bankers and hope it will "trickle down" to John Q Public. They spread stimulus money around in the dark in projects of little permanent significance, and now put Frankford Avenue used car salesmen to shame. "Cash for Clunkers" is the most wrongheaded, environmentally unfriendly, class-demeaning piece of federal nonsense since prohibition.

Jim Foster
Philadelphia, Pa. 19119

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Blogger Jeremiade said...

The cost of the stimulus programs so far is 3.27 trillion and the value of all 500 companies in the S&P 500 is 8.8 trillion.

Thu Aug 06, 10:05:00 PM EDT  
Blogger Ed Feldman said...

With all due respect Jim, logically, the most wrongheaded piece of federal nonsense since Prohibition would have to be Marijuana Prohibition.
Ed (I grow wild in all fifty states too) Feldman

Sun Aug 09, 01:29:00 PM EDT  

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