Dear Mr. Obama,
I think you’re a great guy and a dynamic speaker. Heck, you could sell ice to Eskimos and make them pay double for the privilege.
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But when it comes to your plan to rescue and resuscitate our ailing economy, chances are you’re going to fail.
I know that a lot of folks are up in arms about your massive $787 billion spending plan that you say will create or save 3.5 million American jobs. Your Republican foes are especially dubious because they believe that you should have put in more tax cuts so that American consumers could make their own decisions about how they will spend their money.
In my view, your plan is not going to work because you are guilty of thinking too small. You are budgeting for an extended skirmish when, in reality, we’re in the midst of a full- scale war.
Now About This Bipartisan Thing
You don’t bring a pea shooter to stop a tank. You bring a bazooka, or better yet, a howitzer.
I realize that you’re the new kid on the block. You are just trying to fit in with the other kids.
But Mr. President, consensus is highly overrated. It’s like trying to paint a portrait by committee.
Look what happened the last time you tried.
You only got three votes from the opposite side of the aisle, and those guys are paying the political price. You could do belly flops into a pool of green jell-o, and you still wouldn’t get the bipartisan support you crave.
We have a $14 trillion a year economy.
Dozens of economists have weighed in on this matter. Recently, conservative commentators like Martin Wolf, Associate Editor of the Financial Times of London and Washington Times columnist Tony Blankley have argued that reviving our contracting economy will require a federal injection far greater than the one you got Congress to pass.
Your plan only calls for about $350 billion to be spent in the first year. The rest would be dripped in like a time-release cold capsule. Wolf, an economist by training, contends that to overcome the downward forces on the economy, the federal government must spend at least 7 to 8 percent of the GDP over the next two years, about $800 billion a year.
Markets Plummeting — a Warning Sign
I realize that your spending bill is not chump change. Even you acknowledged in your speech before a joint session of Congress last week, that we probably will have to spend more to get the job done.
There’s no reason to wait.
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The markets are falling fast. The only thing that may keep them from slipping into an abyss is a real surge in consumer spending.
At this point, instead of looking for shovel- ready projects, we might be better off sending every American a check for $2,500 and telling them it’s their patriotic duty to go on a spending spree.
I am also perturbed by your double-speak about the fate of our troubled banks.
You quickly dismissed the notion of nationalization. Clearly, this is a political hot button.
As a practical matter, aren’t we already nationalizing the banks?
Waiting is the Wrong Mode
Citigroup just went to the piggy trough for another $30 billion. The American taxpayers now own 40 percent of this stumbling behemoth. We may own it, but we still don’t control it.
You can stress-test the big banks until the Cubs actually win World Series, and they still would be insolvent by anyone’s definition.
Don’t put it off any longer. Do what the FDIC does everyday. Declare these banks insolvent, put them in receivership, and sell off the pieces to the highest bidders. It’s what we’re going to do with AIG. Do the same with the banks.
During their financial crisis, the Japanese dawdled. Instead of euthanizing their bloated and moribund banks, they kept them on life support. The result was a prolonged economic downturn that lasted nearly 13 years. Japanese historians already are referring to this dreadful time as the Lost Decade.
You have repeatedly said that Abe Lincoln and FDR are your heroes. If you have gleaned anything at all from their presidencies, it’s that half measures never will work when you’re in the fight of your life.
If you’re the President, be the President. Be bold. We need it.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
