If You are Putting Your Faith in the New Year, You May Want to Think Again

As the ball dropped in New York City at 12:00 AM on New Year’s Day, a rather plastic-looking Dick Clark wished everyone a Happy New Year and assured us that 2010 will be a good new year. Although 2009 hadn’t been the greatest of years with a declining economy and a string of terrorist attacks near the year’s end, Dick Clark assured us of a brighter 365 days ahead. Similar calls were proclaim elsewhere on New Year’s Eve and New Year’s Day. Optimists pointed what they saw as rising national economy, some even predicting a “mini-boom” with growth rates of 4-5%. Even President Obama’s slow but steadily declining approval rating shot back up to almost 50%. As we said good-bye to 2009 and welcomed 2010 we blindly have placed our hope in the future. Americans have bought the ma

Thus, throughout the last decade Americans aggressively consumed in a vain attempt to define themselves and bring themselves happiness. This caused Americans to borrow increasing amounts of credit in other to fuel their spiraling consumption. This includes federal and state governments that sought to bring political salvation to Americans through entitlement programs. In both private and public cases, there was a sense that we could spend our way to salvation. If only we threw enough money at our problems (poverty, ignorance, unhappiness) they would all go away. However, this over-consumption fueled a credit crisis. This first became evident when the housing bubble burst in 2007. The Feds had reduced interest rates for banks encouraging the banks to lend out loans to people who couldn’t afford them. Cheap loans fueled over-production in the housing industry. However, when it became apparent that people could not meet the payment on their loans, people stopped buying up houses and the housing market crashed. This caused a downturn in the economy which revealed serious over-extension in credit and caused the collapse of several business scams, notably Bernard Madoff’s billion-dollar Ponzi scheme. This caused a full-on market failure in which stocks and economic growth dropped precipitously and unemployment rose. Yet, rather than being chastened by our greedy-consumption and over-spending, our government, in bipartisan action, decided to throw more money at the problem (at the tune of about $700,000,000,000 by Bush and Obama each).

In further evidence that Americans have not taken serious the lessons learned from 2009, wall-street and government economists proclaimed economic recovery because Americans were spending more again. So Americans re-engaging in the same self-destructive behavior that caused this depression and this is seen as a positive turn of events? It is for this reason that I put no faith in free markets beyond their pragmatic value. The free market is just a tool and, like all tools, it must be used wisely. Our consumption must be chastened by commitment to a set of values beyond ourselves (I believe religious values to be the best solution, namely because I believe they are on the only legitimate values that exist. But that is another matter entirely). Yet Americans in general have not learned with lesson and perhaps are not likely to learn it. That is why I put not hope in 2010; Americans will merely resort back to the same behavior as they did last decade. The stimulus has “saved” our economy by keep it artificially afloat but at the expense of a massive expansion in the federal deficit. Unfortunately, the government does not procure its funds out of thin air; it gets funds through taxation. Democrats in Congress and the Obama administration are suggesting that we need new taxes to curb the federal deficit. They blame the deficit, in part, on tax cuts during the Bush administration. But wait they fail to realize (perhaps it has only dawned on you a year into his presidency that Obama lacks any semblance of economic sense) is that tax cuts ensure national prosperity which leads to higher revenues in the future. However, tax cuts are meant to coincide with temporary spending cuts in order to avoid an increasing deficit. The Bush administration cut taxes but without reducing spending and thus increased the deficit. High spending, not high tax cuts, is responsible for our nation’s mounting debt.

What Obama fails to understand is that raising taxes on an economic that is still on shaky ground will breed disaster. All of bailout money that was given out by the government in 2009 will simply be re-collected by the government in 2010. To make matters worse, much of this tax money will be exacted from businesses that remained sound during the financial crisis. Essentially, it will be the honest and stable businesses that will end up footing the bailout for the dishonest and poorly run companies that nearly collapsed during the economic downturn. Thus all the bailouts will really have done is delayed the inevitable. New taxes will hamper the growth of our economy which is in the process of recovery, which will be much higher than the $1.4 trillion given out in bailouts in the last year of Bush and the first year of Obama due to entitlement programs that are spiraling out of fiscal control (social security, Medicare, Medicaid) and an entitlement program that will spiral out of fiscal control (ObamaCare). If you really believe that the government is going to run ObamaCare in a fiscally responsible manner, please remember “Cash for Clunkers” and social security which were likewise suppose to be fiscally sound. If Obama and the Democrats get their way with Health Care “reform” and tax hikes, you will most definitely want to revise your hopeful stance on 2010.

ntra that 2010 will see a reversal of American fortunes. Yeah, don’t bet on it.