On Stimulating a Titanic-Sized Disaster

Attention, all passengers aboard the (USS) Titanic: if you have any sense at all, you will find the nearest lifeboat, or floating piano, and prepare to abandon ship.

That's the scenario offered today by Michael Gerson in The Washington Post, as he surmises that this month's disastrous jobs report "opened a long gash beneath the waterline of President Obama's legislative agenda."

"Few realize it, but a scramble for lifeboats is about to begin."

Today's news is chock full of speculation on whether there will be, or even should be, a new stimulus package "bigger than the last" to "get us out of this recession."

Clueless politicians in Washington seem hellbent on recreating all of the mistakes of the past year, not to mention some of the doozies from the Great Depression.

Stimulus spending -- deficit spending -- is like applying more speed when you have reports of icebergs. Hell, we're unsinkable!

Around midnight on April 15, 1912, there were a few minutes when Capt. Edward Smith of the Titanic realized his ship was going down -- six watertight compartments breached, less than two hours to float -- yet his passengers slept in happy ignorance. A historical fate hardened while most of the participants dreamed on.

Of course the Titanic would not have been in that position had the boat slowed down when it first heard of the icebergs. At a slower speed even that clunky ocean liner could have been turned in time to avoid disaster.

It is the same with our economy. There were plenty of advisories of danger in the waters. Our last captain, George W. Bush, increased the speed with the first stimulus package, and then was stampeded by his economic team into the TARP program and unconstitutional backdoor loans to GM and Chrysler. But what the hell, he'd put in his time and was transferring off the ship of state. Let the new captain worry about the icebergs!

The new captain, Barack Hussein Obama, issued orders for full steam ahead with a record stimulus, record deficits, and a legislative plan for carbon taxes and health care socialism never seen. Despite the cries from the lookouts, the U.S.S. Titanic is heading straight for that monster mountain of white!

On closer inspection, the economic news, which seemed bad, is even worse. Not only did unemployment rise to 9.5 percent but wages fell, undermining the consumption needed to revive a consumption-driven economy. Unemployment increased among "breadwinners" -- married men and women who head households -- also making major family purchases more difficult. Recent increases in unemployment benefits and food stamps have helped many Americans pay for food and rent. Jobs, however, are what lead to the purchase of furniture, cars and homes. Paired with a decline in business investment, these trends make a second-half recovery less likely.

The stimulus package hasn't been very stimulating -- as many economists predicted. Pouring money into the economy through a thirsty sponge of federal programs -- the preferred method of Congress -- is slow and inefficient. In retrospect, all of the stimulus funds should have been given to individuals directly from the tap.

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Obama's spending ambitions would have been jaw-dropping even in the best of economic times. Federal spending this year is about 28 percent of gross domestic product -- a figure exceeded only when Franklin Roosevelt was fighting a global war against Germany and Japan. Along the fiscal path Obama has chosen (according to the Congressional Budget Office) our national debt will more than double in 10 years and will amount to 82 percent of the entire economy.

Initially, Obama counted on an atmosphere of economic crisis to grease the passage of any legislation he pronounced an economic need. But it hasn't worked out that way. Whatever their virtues, restricting carbon emissions and expanding the health entitlement do not constitute a direct response to America's financial and economic failures. No economic theory suggests that a round of new federal regulations and entitlements would result in a burst of economic growth.

Gerson concludes that instead of entertaining more "speed" like stimuli packages, expensive new health care and energy bureaucracies, and higher taxes on all Americans -- violating his "no taxes" pledge on anyone making less than $250,000 (which has already been broken), our captain take the honorable path before it is too late.

Wake up the passengers, end their entitlement dreams, and announce that his ambitious programs must be deferred until the ship (country) is out of danger.

I don't think he'll do it. That doesn't mean you shouldn't do something to protect your own family.