Wall Street Weekly | 11/06/2009 11:45 am

Liz Peek: Obama Deaf to Election Warning But May Get Bailed Out

As bad as the recent jobs report is, the president is likely to receive some good news over the next several months …

Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 11/2)

Editor’s Note: Liz Peek is a financial columnist.

The Bureau of Labor Statistics reports that the unemployment rate rose from 9.8% to 10.2% in October, the highest level since 1983. Job losses were primarily in construction, manufacturing and retail, and were worse than expected. This is not good news; the terrible job market clearly weighs on consumer sentiment and spending, slowing the recovery. The debilitating payroll cuts also produced some cranky voters this past Election Day.

All politics may be local, but it is hard not to read national significance into Tuesday’s election results. Voters rallied against high taxes and the worrisome economy, while in Virginia, disillusioned young and independent voters crossed the aisle yet again to elect a long-odds Republican.

Astonishingly, the Obama administration has chalked up this apparent warning shot to circumstances beyond their control. Neither tea parties nor sinking polls or, now, pointed election returns seem to have made the slightest dent in their enthusiasm for policies that the majority of Americans do not embrace. Speaker Nancy Pelosi could barely contain her glee that the Democrats had picked up an extra House seat in New York – all the better to ram health-care legislation through. Remember Obama’s words on the night he was elected? "I will listen to you, especially when we disagree."

Americans are genuinely concerned about their country’s fiscal prospects, and about Obama’s programs that will create even worse deficits down the road. Fundamentally, they are worried that a shrinking number of people are supporting a growing segment of the population. The jobs being "saved" or added currently are mainly government jobs; the private sector continues to lay off workers. Even a caveman (with all due respect) gets that this is an unworkable trend.

In 2007 economist Gary Shilling wrote that 52.6% of Americans received "significant income from government programs, up from 49.4% in 2000 and 28.3% in 1950." These figures included, for 2007, 19 million Americans on food stamps, 57 million receiving Social Security payments, over 4 million collecting income from the Veterans’ Administration and millions more employed by the government. For sure, the figure has risen in the past two years as increasing numbers have received unemployment assistance and as the government has propped up banks and autos.

At the same time, a growing number of Americans do not contribute to our tax roles. The Tax Foundation reports that about one-third of our population files returns but pays no taxes, up from 18% in the early 1980s, while another 20 million Americans do not file returns at all.

This is not about social justice. It’s about a shifting of the economic burden in a way that is unsustainable. As baby boomers approach retirement and begin to receive Social Security, the number of people paying in more than they are taking out is going to shrink yet again. Add to that inevitability the millions that will receive health care under the legislation working its way through Congress and it is no wonder that young voters shifted gears. They see the burden contained in the legislation that Democrats are so eager to adopt. It is worth noting that, in 1980, 55% of Americans were receiving government handouts – a level that ushered in the Reagan revolution.

433 Reader Comments (so far…) Sign In or Register to comment

Mary, I don’t understand the purpose of such a hypothetical question. The reality is Obama is the president, no one else. His actions and inactions are what matter, not the hypothetical possibilities of McCain/Palin. Obama, however inept and ineffectual is what we’re stuck with.

By Leigh Hart on 11/09/2009 12:42 am

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My question was not hypothetical! I asked you a valid question. What would you or your party do differently than Obama and his party have done? My feeling is that you can’t answer the question nor can your Party because you have never gotten beyond the blame game. Grow up and come up with some valid, concret answers to my question.

By Mary E. Sayler on 11/09/2009 2:30 am

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I guess you don’t understand the word hypothetical. Your question is not valid because McCain/Palin lost. We don’t know what they would have done because they were not afforded the opportunity, were they? Furthermore, they aren’t "my party" as I’m a registered Independent.

But, I’ll tell you what I would have done starting back with Bush. I would have let all those businesses that were supposedly too big to fail, FAIL! Businesses, like people should face, accept and deal with the consequences of their actions. Businesses that do not operate under best practices do not deserve to be rewarded.

Starting with Obama I would have surrounded myself with people with real world corporate and executive experience, not those who have been sheltered in academia. Real world experience is what matters…not wonky theorists who have never run anything. When the so called "stimulus bill" was being laden down with over 9,000 earmarks I would have told Congress that any stimulus bill with earmarks would be vetoed. It would have been a bold step of a true leader.

I certainly would not dilly dally around while my hand picked general tried to fight a war without the number of warfighters he needed. I would not sit idly while casualities increased on my watch.

I would fix Medicare, Medicaid and Social Security in order to prove to the American people that government can do something well before asking the American people to support the government taking over the entire healthcare industry. I’d also listen when polls show that the majority of the American people are happy with their health care and don’t want more government interference.

I would allow private insurance pools, insurance to be sold across state lines and expansion of medical savings accounts. I would also support laws allow portability, and no denial due to pre-existing conditions.

I’d do a whole lot different than the Obama Administration. I could go on and on, but that’s a sufficient answer due to your snarkiness.

By Leigh Hart on 11/09/2009 11:46 am

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Leight, you go girl!

By deber B on 11/09/2009 1:01 pm

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Thank you, Leigh. You finally answered my question.

By Mary E. Sayler on 11/09/2009 2:48 pm

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Hi Sandy B….you have posted the plain irrefutable truth. (Although I credit Darth Cheney with creating the mess as well.)

I have been reading and/or speed scrolling the Bush-defender/Obama-basher commentary, I decided to stop here and re-post my analogy of our current "country kitchen:"

A fine brave soul wanted to rescue a restaurant so he took on the job of chef. When he arrived in the kitchen he found a canister of bat guano, a shaker of bitters, and several very rotten eggs. Suddenly the right-eous minority stock owners of the restaurant began foaming at the mouth because the new chef couldn’t whip up an apple pie without restocking the larder.

Is it any wonder they refuse to acknowledge the truth about the canister of bat guano that poisoned our nation for eight long miserable dangerous destructive years? Instead they, our fellow Americans, continue their efforts to sabotage the one who is trying to repair the damage. Sad and bewildering.

By ~ countrywoman ~ on 11/09/2009 12:20 am

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I do not see any blame addressed to the House of Representatives and the Senate. They are the ones who send the bills to the President and he can suggest that they do something but that is about all he can do.

I have tried to tell the Senators and Representatives that the country needs jobs. They just blow off this by mentioning a piece of legislation that create jobs in 2010. We have been in a downward spirl since 2004.

I do not blame President Bush or Obama. They have to work with legistuare who wants to add pork to the bills that they pass in order to get something that would benefit the American people such as those who want to work and can not find it, those people losing their homes with nowhere to go due to fraud, ARM mortgages and predatory lenders etc.

There are highways, public government property, parks, schools etc that need to be repaired and maintained. Our country’s infrastructure is so bad that need to be helped. What is funny is a lot of what needs help was built by the "New Deal" passed President Franklin D. Roosevelt and the Congress to get the country somewhat moving Even though it took the start of the second World War to get us back in track. I do not believe that we would have to go this far.

I hope that the whole government will get its act together and get us moving without passing bills that do nothing for American people.

I am one of the people who is on Social Security disability and would rather not be on it. But with my medical and psychiatric problems, I can not do anything I use to do. I am working with Dept. of Rehabilitation in my state to help me. It might take 3 years to get me back to work. One issue I see that would hold me back is that I use a cane to get around and I am sure in other jobs I have applied to have not wanted to have me. I know it is against the law but they still do not hire me.

By Rachel M on 11/06/2009 4:54 pm

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Oh everyone just be quiet…this mess has been coming for years, and everyone is to blame. Republicans, Democrats and, wait for it, THE AMERICAN PEOPLE! Who votes these asses in? We do. Does anyone actually investigate their politics or ideology BEFORE we vote for them? Or do they just look and sound good on tv so they MUST be ok? Or because your family votes a certain way, so you have to. And the comments about the rednecks? That’s my family…and they voted for Bush. Why, I asked? Because he’s "a God-fearing Christian". That was it. The only reason, and if I brought up anything against him, I was asked to leave. Personally I believe you do more damage by "uninformed voting" than you do by NOT voting. There is no easy fix, and we are just going to get used to helping our friends and family out in these "wonderful" times. To all of you who would rather spend this time blaming others instead of rolling up their OWN sleeves, I say to you….suck it up. Who gives a rat’s ass WHY we are here!?! At this point it just doesn’t matter who did or didn’t do what…Accept the fact that we are here NOW, and let’s try and FIX IT!!!!!! And blaming the "new guy" is a cop-out. This has been coming for decades. (I do love everyone with their "10 year plan", though….as a president only has 8 max…lol. Then the new guy comes in and changes it the way he likes it. Nothing ever gets finished.)

So how about we quit pointing fingers, and actually get off our butts and do something? How many of you people volunteer your time? How many donate to charity if you’re able? How many have taken in the people who have lost their homes, or their pets? How many have donated food or clothing to shelters or the salvation army? I’m a pagan person, and we regularly have food/clothing drives for the battered/homeless women’s shelters, and the local animal shelters. I know that other religions have such things going on…how many give their time, if they can’t donate anything physical? I’ll bet it’s less people than watch "reality tv" or know what’s happening lately with "jon and kate"…lol. And we have the nerve to wonder why we are in the mess we are in…it’s because we suck. Admit it, move on, and let’s see what we can do if we actually try.

By Rose Bean on 11/06/2009 5:08 pm

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Much of what you say rings true to some extent Rose… yet your generalizations offend me! My family and our small busienss has struggled for over a year. The ONLY reason we area still afloat is because we had great credit, good family and I pride myself that we have yet to ask them for help financially but do know that if it gets really bad they will be there for me!

My family are die hard Dems…My elderly father has more than once tole me how "dissappointed" he is that I am not active in the party. He would probably go into cardiac arrest if he knew I changed my party affiliation to Independant..

I became that way after being self employed I became aware of how much government intrusion hamstrings my company from making a profit in a good year much less making it harder in the lean times.

I donate my time to youth programs, help out the local food banks and Goodwill shelters with unused household items to sell in their stores and have a rescue dog. When our business flourished I paid full benefit to my employees and 100% health insurance for employee and family as theyw ere considered part of my family. It was the worst day of my life the day they were layed off. Feeling horrible I continued their health insurance for a few months after hoping things would turn around against the advice of my Accountant and am paying for it now.

I enjoy a bit of reality tv occasionally ( Dancing with the Stars) for a break in the dismal reality of real life of borrowing from Peter to pay Paul to keep my home. Jon and Kate what little I know of them only make me more depressed thinking of what child abuse they are doing to their children in the name of money.

Please do not lump all in your stereotype world.

By S.J. Morgan on 11/06/2009 5:29 pm

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Forgot to add…I’m doing something about it by working to fire the bums who are not listening to us and trying to keep my business alive in spite of the governments attempts to destroy it!

By S.J. Morgan on 11/06/2009 5:30 pm

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I do, Rose. I spend many hours a month as Membership Chairman of our Humane Society. I just finished a drive for goods to donate to a Vietnam Veterans group. I’m in a neighborhood with very active people…for charities, in politics, in many fields. When an ice storm drove people from their homes, we had open doors.

And most of us..a solid 90%… are SICK of the excuses in Washington. The lies, the broken promises, the corruption….just today news of SEIU’s strong connection to this administration…$400 million donated to get Obama in the White House. 21 VISITS in one year by Andy Stern, President of SEIU. PRIVATE visits. They’re RUNNING the place, and they’ve been paid off with an auto industry. Plus lots of other bonuses.

Many of us…professionals, business people, housewives, seniors, even young voters…have attended town halls, protest meetings, etc. And we’ve been called "crazy fringes," "rednecks"….among the nicer names. We are simply Americans who are desperate to get our country out of the hands of radicals and back to the republic it can be, and has been.

I wasn’t really cool with the Clinton admiinistration. But I’d do most anything to have even that back.

Middle America is incensed at the direction this country is being taken, and we’re taking it back. If we have to work to replace the whole damn Congress.

By Callie O on 11/06/2009 9:10 pm

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I am thinking that what happened in New Jersey and Virginia Tuesday was not a win for the Republicans or Democrats….it was a win for the PEOPLE! The PEOPLEare speaking out and now voting for their beliefs and what they want for their country. I would suggest both the Republicans and Democrats start listening to the PEOPLE, because they will no longer be SILENT!

By Kathy Lee on 11/06/2009 5:59 pm

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Kathy Lee - Thank you for your thoughtful and insightful post.

By Patricia Sprofera on 11/06/2009 6:16 pm

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Please do not lump all in your stereotype world.

By S.J. Morgan on 11/06/2009 5:29 pm ************************************* ?? umm, not sure what you’re talking about. First of all, if you ARE doing all of those things, why are you getting defensive? I’m obviously not talking about you. I’ts just hard to address everyone individually…way too many of you…lol (BTW…I don’t consider "Dancing With The Stars" any more a "reality show" than I do any ice skating competition, race or the like…lol I’ve caught a couple of shows visiting family) And I’m glad you’re still above water, financially. As far as myself, my credit probably is not the greatest. My family and my best friend got a house a few years ago…we were all working full time, and able to pay the mortgage, and then some. Within 6 months, I was the only one left with a job. Without the help of my friends and family, I would be absolutely screwed. I said everything I did because I’ve been on both sides of the coin. Sometimes you have to ask for help, and sometimes you should give it. I just get so frustrated with more time being spent on blaming people for the mess we’re in, than being spent on actually FIXING it! Makes no sense….if your house is on fire, do you stand around going, "well he did it….no, he did!", or do you just put the damned thing out, and sort it out later! And it’s cool that you did that for your employees…a lot wouldn’t. And it’s one of the reasons we are in the mess we are in. The war did a lot of bad things for this country, financially. I’m sure someone here will come up with just how much was spent… :) But I’d read about how people were being laid off left and right. A thousand here, a few more thousand there…every day I’d see this and think, if we don’t stop laying people off, there is going to be no one out there with any money to buy anthing! And THEN how is your business going to do! Just makes no sense. And then my family lost their jobs. We are barely making the bills…if it isn’t pink, I don’t know what to do with it…lol. But we still try to help, mainly animal shelters, women’s and children’s shelters…have to help the innocents, you know?

By Rose Bean on 11/06/2009 7:43 pm

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I don’t blame Obama for the economy tanking in fall of ‘08. I blame him for being stupid about how to fix it. Sure, GWB and his Republican’s spent too much money pandering to progressives who wanted Medicare Prescription Drugs and other stupid programs And, arguably, the best response to 9-11 was no response at all…after all it was a one-off event not likely to reoccur as long as we did not do something arrogant to anger anyone. No Child Left Behind was destined to be a disappointment once Ted Kennedy took out the cornerstone of Bush’s original proposal (which was vouchers for the poor stuck in failing schools) in order to placate the NEA. Throwing money at problems only works on a micro level (as in, if I could afford it I would throw some money at my roof that needs repair) and never on a macro level because too many people have a hand in the *stash* for it to make it to its intended goal.

So, let us assume that GWB was the biggest disaster in the entire history of the United States. Surely…someone as erudite, brilliant and well-advised as Obama should be able to stop the bleeding of our economy. Instead, unemployment is higher than even his advisors predicted it would be without the stimulus. No one is investing. Businesses aren’t hiring and they aren’t spending. Neither are consumers. But lets move ahead with Cap and Trade which will tax the bejesus out of everyone who turns on a light (actually, since Al Gore turns on a lot more than the rest of the country…I would at least enjoy seeing him taxed) and Universal Health Care.

For those of you who are worried about the high costs of the wars, hang in there until 2012 and a half. As with the health care bill, and cap and trade, Obama will not implement his policies until after he is reelected. Until then, he will allow our troops to languish and be killed at ever higher rates. When he is re-elected he will withdraw them and abandon our efforts to create stability in that part of the world. So, in 2013, while you are waiting in line to get your child vaccinated for swine flue or whatever the crisis du jour is and see your income (should you have a job) consumed in energy taxes and high costs and while your mothers and fathers are denied chemo for prostrate or breast cancer because they are too old or fat to live any longer ( or god forbid you are on a 5 week waiting list to get a biopsy of that lump in your breast ) you can be grateful that GWB is no longer president of the United States. That is assuming of course, you are not attacked by some poor misunderstood and harassed guy with pre-traumatic stress syndrome screaming Allah Akbar as he guns your politically correct ass down. But even then it will be GWB’s fault because….well because… well because…GWB might still be alive and handing out candy corn to trick- or -treaters in his Dallas neighborhood. The swine!

By Katharine Gray on 11/06/2009 10:16 pm