Fiscal Austerity vs. Fiscal Insanity

I just read a great article on the G-20 summit being held this weekend in Toronto in the Telegraph, a UK publication. It outlines the differences in the approaches toward handling the current economic crisis between the Obama administration and his counterparts Angela Merkel from Germany and the new UK Prime Minister, David Cameron.

While Obama wants to continue to try and spend our way out of this recession, Germany and Britain are planning the opposite. They are looking more toward the long term now. They realize there is no short term fix to the current problem. They do realize that if they continue to rack up big deficits, there will be no confidence from consumers or business in their economies going forward, and therefore, no hope for recovery in the foreseeable future.

This is what Obama does not get. As intelligent as this man is reported to be, he clearly is not in tune with what is going on in this country. Americans are hunkering down, trying to save our pennies, because we see a fiscal implosion in DC. We realize that if Washington does not come up with a credible plan to deal with the deficits, that it will negatively impact all of us.

Obama clearly does not have an understanding of the theory of expectations. Markets, businesses and people tend to look ahead now and then. Not all the time, but in periods of difficulty, we do. Yes, some people simply bury their heads in the sand and hope for the best. But, the decision makers survey the landscape to see what lies ahead.

What these people see is a culture in Washington that is unwilling to make the tough decisions to return to balanced budgets. They see a government that wants to continue to add new programs with money it does not have. They see a Washington that is unwilling to tap into our own natural resources to provide for our own energy. They see a Washington that remains corrupted by greed and scandal.

Since all they see is a Washington that is getting in the way, they are preparing more for the worst than for the best. Businesses are not hiring because they have no confidence in this economic recovery. As a result, people who have jobs are worried about whether they will keep their jobs, and are spending less.

Washington needs to come up with a plan. Congressman Paul Ryan of Wisconsin has a plan. It will only have a chance to be implemented if the Republicans take back Congress. Obama will likely stand in the way. Then we will need to throw him out too.