THE MORNING-AFTER PILL BROOKS & RYAN TO THE RESCUE?

OBAMA’S STATE OF UNION

THE MORNING-AFTER PILL

BROOKS & RYAN TO THE RESCUE?

For me, and others, the “Who is Obama?” question remains unanswered. I suspect he is exploring the possibility that, by compromising, he may yet earn a second term. That may or may not pan out, but the core questions about his character, deep ideology and so on, are very unsettled.

The rhetorical style of his SOU 2011 address was an echo of the soft generalities of the campaign trail, the blandishments that persuaded many conservatives and moderates (who had not acquainted themselves with his radical formation) that Candidate Obama had “moderate tendencies.”

Of course, this impression was undercut by his actual behavior.

“FACTS ARE STUBBORN THINGS.”

John Adams POTUS # 2

Two white hot issues run under all the presidential rhetoric; they are thinly and temporarily hidden like fresh lava under a melting layer of ice. They are the fact of the impending energy bottleneck and the fact of the coming sovereign indebtedness crisis.

Either can gut any US economic recovery. Neither is really much of a secret.

The problems are of our own making. About half of all current federal expenditures are funded by borrowing without any plan for repayment. Almost none of the three trillion dollars already borrowed by this government has done anything effective to alleviate the energy bottleneck.

There is a yawning gap between this president’s rhetoric and the real world solutions that will be necessary to seriously increase affordable energy resources in real time while reducing government debt before a credit death spiral takes hold. It is the same gap between the promise of that windmill farm on the hill and the stubborn fact of an idle trucking fleet with empty gas tanks.

Neither solar panel energy nor wind generated energy is available on a 12 months, 24/7 cycle, nor can the electricity these technologies generate yet be efficiently stored, nor, in their aggregate do these sources even come close to meeting the needs of the US transportation sector, let alone the prodigious requirements for heating and cooling. For the next four to seven presidential terms they will remain marginal, fill-in energy resources.

None of the federal funds appropriated, expended or promised for “clean energy technology” – not the windmill subsidies, nor the “solar shingles”, nor the promised “biofuels”; not even the “1 million electric vehicles on the road by 2015”, nor the plan to give “80% of Americans access to high-speed rail” in 25 years; and surely not the planned increase in the “nation’s wireless coverage” (just to identify the few concrete proposals in Mr. Obama’s speech) can put those idled trucks on the road.

Nor will Mr. Obama’s clean energy measures generate profitable private commercial ventures capable of restoring the millions of jobs lost since 2008. Impractical and beside-the-point measures (thinking of the “shovel ready stimulus money) have been allowed to trump urgent and immediate needs.

Here is a thought experiment: Suppose the entire stimulus package had been spent on startup-ready, off-the-shelf energy sources – measures long advocated but opposed by liberal political leaders like opening new natural gas fields & oil fields, restarting others, building a refinery or two and issuing a new wave of nuclear power plant licenses, along with spending on the necessary security infrastructure for them. If you understand how these things work in the marketplace, two years later, i.e., by now, oil and gasoline prices would be trending down, not up, additional private investment money would be pouring into the economy, and federal tax revenues (along with many state tax revenue streams) would trending be up, not down.

“But wait’, you ask, “Why can’t we still do those things now?” Because facts are stubborn things: The federal cupboard is bare, the money having been pre-spent three times over.

The full text of the SOU and the Response is posted at http://jaygaskill.com/SOUText2011andResponse.htm .

SAMPLES (Mr. Obama’s excerpts are POTUS, and Congressman Paul Ryan of Wisconsin’s are RYAN)

POTUS

We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.

RYAN

The facts are clear: Since taking office, President Obama has signed into law spending increases of nearly 25 percent for domestic government agencies — an 84 percent increase when you include the failed stimulus.

All of this new government spending was sold as “investment.” Yet after two years, the unemployment rate remains above 9% and government has added over $3 trillion to our debt.

Then the President and his party made matters even worse, by creating a new open-ended health care entitlement.

POTUS

The future is ours to win. But to get there, we can’t just stand still. As Robert Kennedy told us, “The future is not a gift. It is an achievement.” Sustaining the American Dream has never been about standing pat. It has required each generation to sacrifice, and struggle, and meet the demands of a new age.

This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

RYAN

Just take a look at what’s happening to Greece, Ireland, the United Kingdom and other nations in Europe. They didn’t act soon enough; and now their governments have been forced to impose painful austerity measures: large benefit cuts to seniors and huge tax increases on everybody.Their day of reckoning has arrived. Ours is around the corner. That is why we must act now.

Some people will back away from this challenge. But I see this challenge as an opportunity to rebuild what Lincoln called the “central ideas” of the Republic.

We believe a renewed commitment to limited government will unshackle our economy and create millions of new jobs and opportunities for all people, of every background, to succeed and prosper. Under this approach, the spirit of initiative — not political clout — determines who succeeds.

Millions of families have fallen on hard times not because of our ideals of free enterprise — but because our leaders failed to live up to those ideals; because of poor decisions made in Washington and Wall Street that caused a financial crisis, squandered our savings, broke our trust, and crippled our economy.

DAVID BROOKS & PAUL RYAN TO THE RESCUE?

David Brooks is the civil, philosophical columnist of the New York Times. Brooks is the Times’ one remaining conservative voice – and one of the few conservatives Mr. Obama is willing to talk to.

Paul Ryan is the civil, practical Congressman from Wisconsin, one of the few members of the house or Senate with formal economic training. Ryan has become the GOP’s economic policy leader by virtue of study and outspoken honesty – and one of the few republican “Tea Party” favorites in the house Mr. Obama has said he might be willing to deal with.

Both are highly intelligent. They are but two are among the voices that POTUS should be carefully listening to with an open mind.

DAVID BROOKS

The New York Times

Brooks, “The Talent Magnet” in the New York Times” LINK

The Key Idea

“In the 21st century, the U.S. will no longer be the Big Dog. Human capital will be more broadly dispersed. There will be an array of affluent nations fully engaged in the global economy. Therefore, competitiveness will be more about organizing relationships than amassing force. To thrive, America will have to be the crossroads nation where global talent congregates and collaborates.’

Seed idea that I strongly endorse and share

“The new sort of competition is all about charisma. It’s about gathering talent in one spot (in the information economy, geography matters more than ever because people are most creative when they collaborate face to face). This concentration of talent then attracts more talent, which creates more collaboration, which multiplies everybody’s skills, which attracts more talent and so on.

“The nation with the most diverse creative hot spots will dominate the century.”

Other pull quotes

“But everybody knows a university president is a powerful stagehand.

‘The professors, the researchers, the tutors, the coaches and the students are the real guts of a university. They handle the substance of what gets done. The administrators play vital but secondary roles. They build the settings. They raise money. They recruit and do marketing. They help students who are stumbling.

“The administrators couldn’t possibly understand or control the work in the physics or history departments. They just try to gather talent, set guidelines and create an atmosphere where brilliance can happen.

“So it is with government in an innovation economy. Entrepreneurs, corporate executives, line workers and store managers handle the substance of the economy. Government tries to nurture settings where brilliance can happen.”

Nexus: Medieval Florence, Silicon Valley, Silicon Alley… and more…. SEE “CREATIVITY & SURVIVAL” below

CONGRESSMAN RYAN

Paul Ryan was trained as a supply-side economist and now is a rising GOP star, congressman from Wisconsin. He is a knowledgeable deficit hawk who has published an influential Road Map for the American recovery that has inflamed the left.
[ < http://www.ibtimes.com/articles/104873/20110125/economy-fiscal-crisis.htm# > ]

The core premise of this line of thinking (with which I am in general agreement) is that, in the aggregate, federal expenditures are far less efficient at stimulating commercial, profit-making enterprises than private investments are. Therefore, pulling money out of the productive, private sector via taxes (or fees as stealth taxes) to fund federal spending is a net drag on the private economy. This net drag effect (remember we are talking in the aggregate here) cannot be avoided by borrowing the money to support federal spending, because the borrowing has the effect of drying up private capital over time.

Nexus: Ross Perot…who was right all along, and the European Union economists who now, finally, “get it”.

MY COMMENTS

BREAKING OUT

A second point, less widely acknowledged, but clearly true, is that the 1950’s notion that stimulating private consumption will lead inexorably to more employment no longer works because too many domestic goods are made outside the USA. At the risk of oversimplification: Any “stimulus” that prompts the purchase of even more cheap Chinese goods is a highly inefficient, possible futile, strategy to promote hiring.

The solution to the bind created by the legacy of bipartisan fiscal irresponsibility over four decades – is twofold:

(1) Dramatically cut federal spending, if possible with minimal to zero net tax increases. [This is Ryan and the fiscal hawks.]

(2) Quickly and deftly cut away all of the bureaucratic obstacles to the creative, innovative processes. A short term boost in revenue – to make the medicine go down – can only be accomplished by selling American energy resources on the world market, and this makes sense only as a time-limited strategy. [This is me an a few conservative supply-siders.

See http://jaygaskill.com/GUIDEtoRECOVERY.htm and http://jaygaskill.com/BREAKOUT3.0.htm ]

The details will be critically important, and the opportunities for political sabotage manifold. Only an engaged president with backbone, vision and true grit can pull this off.

CREATIVITY & SURVIVAL

As it happens, Mr. Brooks’ remarks tie in perfectly with a project I’ve been working on for the last year or so. Look for the first installment on Monday, January 31, 2011, “CREATIVITY & SURVIVAL: Building a world Renaissance, Using the American Model.”

Here is an excerpt:

“We are living at the dawn of what later generations will call the creative imperative. As a vision, it has the power to drive a major reformation of the way we will look at culture, government and politics. That reformation is greatly needed, and it is at hand. The process begins everywhere that capable people gather to conduct a reappraisal of the human creative enterprise, its foundations, the conditions that it needs to thrive, and its proper place in the pantheon of modern civilization. The new vision will enable a new, constructive inter-partisan dialogue. This will be made possible by the recovery of liberalism from the grip of bureaucratic authoritarian ideologies and the liberation of conservatism from its establishmentarian roots.”

These themes are developed in a bipartisan, post-ideological framework in Monday’s post, and the topic is elaborated in a more specifically political context in a longer work to be released in March.

Stay tuned….

JBG

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