More on Obama's capitulation and betrayal

Despite its flaws, failures and setbacks, FDR's New Deal was remarkable in what it accomplished - mirror opposite of Obama's betrayal, selling out to wealth and power interests at the expense of public need. In contrast, New Deal initiatives put millions back to work, reinvigorated the national spirit, built or renovated 700,000 miles of roads, 7,800 bridges, 45,000 schools, 2,500 hospitals, 13,000 parks and playgrounds, 1,000 airfields, and other infrastructure projects, including Chicago's lakefront.

It cut unemployment from 25% in May 1933 to 11% in 1937, before spiking after Roosevelt declared victory too soon. War production then restored economic growth, created full employment, and ended the Great Depression.

Overall, Roosevelt revived a sick economy. Obama's policies wrecked it by shunning massive job creation programs. Instead, he looted the Treasury for Wall Street, stresses warmaking over domestic stimulus, and ignores public need, except small measures like temporarily extending unemployment insurance, several tax credits, and adjusting the alternative minimum tax.

Longtime market analyst/insider Bob Chapman said despite trillions of Fed QE, the economy is "barely to the plus side....Only the speculators in banking and on Wall Street are having a good time. This is the same monetary and fiscal management that was witnessed in the late 1920s. Credit growth and financial flows increased exponentially." America, European, and other "economies are making the same mistakes, thus, no one is going to escape....It is not going to be pretty as prices rise, wages stagnate and unemployment grows." Counterproductive measures "can only mean worse results in the end." Growing problems look increasingly insurmountable, bad policies exacerbating, not relieving, them.

Economist David Rosenberg says "the bond market (is) signal(ing) that there is no commitment in the United States to get its fiscal house in order....It remains to be seen if a temporary move to reduce payroll taxes" gives the economy life. "By definition, people only alter their behavior based on changes to their income, wealth and job situation that are considered to be permanent."

The 2008 tax rebates were "fleeting" and ineffective. The "hyperbole" about Obama's "fiscal package is amazing - USA Today said it's a "sweeping tax deal." Moody's Mark Zandi called it "a game-changer." Rosenberg said "have mercy on me, please. If there is a game-changer, it is that we supposedly have a new Congress that got elected on fiscal probity."

Obama's compromise adds $984 billion to the deficit through 2012. "Yet there is nothing here that resolves either the ongoing crisis in housing or employment." At best, maybe people with extended unemployment insurance "will be able to turn up the heat....middle class (recipients) will be able to fill their tanks" at higher prices, and rich folks already have plenty to do as they please, and don't need more they'll save, not spend.

"Under closer inspection, there wasn't really that much 'new' in (Obama's) announcement, except" that he "repeal(ed) everything he said he stood for during the election campaign like reducing the extreme income bifurcation exacerbated during the Bush era."

That aside, his "bells and whistles" still leave growth "totally abnormal," a slow-growth economy producing way too few jobs, what it mostly needs to revive. Moreover, state and local cutbacks add another cloud as well as possible European debt defaults. Key is that administration and Fed policies show "the US has no intention of getting its fiscal house in order."

There will be a price to pay" for excessive borrowing and bad policies overall, especially ones leaving the housing market and jobs situation in disarray. The former is still cratering, the latter getting no stimulus help. On the contrary, Obama aggressively targeted labor, including through auto industry forced GM and Chrysler bankruptcy and reorganization wage-cutting, reverberating throughout the industry and others. At the same time, he intervened to quash any attempt to impose pay limits on executives of corporate swindlers, especially insolvent banks, leaving them free to speculate with public money but do nothing to increase lending to stimulate growth.

A Final Comment

Congressional Democrats still control both Houses with substantial majorities and will until the 112th Congress convenes in January. Yet, on December 7, New York Times writers David Herszenhorn and Sheryl Stolberg headlined, "Obama Defends Tax Deal, but His Party Stays Hostile," saying:

Despite Vice President Joe Biden's efforts to enlist support, he "failed to convince many of his old Senate colleagues to line up behind the plan at a tense lunch meeting....About a dozen Senate Democrats (voiced support). Aides said about 30 were firmly opposed, leaving 16 or so undecided" with no assurance deficit hawk Republicans will back their leadership's push for passage.

Opposition rhetoric from both Houses is strong. Senator Bernie Sanders called the deal "an absolute disaster and an insult to the vast majority of the American people," giving tax breaks to the rich, "driving up our deficit, and increasing the growing gap between the very rich and everybody else."