President Obama entered the White House with a dangerous belief. He took his seat in the Oval Office thinking he had a mandate from the American people. He apparently believes that because John McCain was defeated handily, the country wants change of a socialistic nature. President Obama and his associates believe that the voters’ repudiation of politicians like George Bush and John McCain show that conservatism as a whole is no longer of interest to the American people. This is an illusion, because it was not small government core conservative principles that the American public voted out. Conservative principles were not even on the ballot. It was the blue-blood Republican moderatism that characterized the policy advocated by Bush and McCain that was rejected. This illusion in the mind of the new administration is incredibly dangerous because they are acting as if the public is open to leftward political movement on a grand scale. The administration has already begun to push incredibly large spending bills on the public, and it has said it plans to do even more.

There are three main ways for the government to acquire more spending money: debt, taxation, and printing money. For Obama to accomplish his massive spending goals, he will have to do all three, which will have decisively negative effects on our already weak economy. The administration has already employed one of these three methods.

Within the first week of his presidency, the administration has pushed for a massive “stimulus package,” ostensibly aimed at giving a boost to our faltering economy. This piece of legislation (all 600+ pages of it) is a bloated, pork-filled, Keynesian disgrace of a bill. Moreover, it could be argued that much of this legislation is actually unconstitutional. Honor is due to the House Republicans, and 11 House Democrats, who rallied together in opposition to this bill. House Minority Leader John Boehner posted this revealing look at the bill on his website. Rep. Boehner really did some good work on this bill, particularly in pulling together every House Republican in opposition to it. Here are some interesting excerpts from his piece:

• The $825 billion package will exceed more than $1.1 trillion when adding in the interest ($300 plus billion) between 2009-2019 to pay for it.
• All members of the “Accountability and Transparency Board” created by this legislation are appointees of the President; none will be appointed by Congress.
• $825 billion is just the beginning – many Capitol Hill Democrats want to spend even more taxpayer dollars on their “stimulus” plan. In fact, the Chairman of the House Appropriations Committee, Rep. David Obey (D-WI), told Roll Call earlier this month, “I would not be surprised to see us go further on some of these programs down the line.”
• The House Democrats’ bill will cost each and every household $6,700 in additional debt, paid for by our children and grandchildren.

This bill can only be defined as Keynesian in nature, because the authors feel that injecting federal government money into the economy through spending programs and temporary tax refunds will increase economic activity in the long term. These are the same Keynesian tactics used by the Bush administration that did little more than put our country in greater debt. For a great explanation of Keynesian economics, watch this video from the Cato Institute’s Dan Mitchell.

These are the economic principles that the Obama administration have repeatedly endorsed, and by which they will inevitably rule for the next four years. The belief that government spending can cure failing economies has been a bedrock principle of the new President from the beginning. In a recent interview with Reuters, Obama said, "The consensus is this, that we have to do whatever it takes to get this economy moving again, that we have to -- we're going to have to spend money now to stimulate the economy." Obama went on to say, "And (consensus is) that we shouldn't worry about the deficit next year or even the year after; that short term, the most important thing is that we avoid a deepening recession." This is a revealing look at the underlying economic principles Obama holds. This kind of freewheeling spending ideology is exactly what prolonged the Great Depression, and has led to our astronomical national debt. As mentioned in a previous article, any nation whose national debt is greater than 60% of its GDP is considered a very risky investment in international banking circles. As this chart indicates, America’s debt could surely put it into that category already.

The use of the word “consensus” is evidence that he believes, as I mentioned earlier, that he has been given carte blanche from the people to enact this kind of socialistic legislation. Mr. Obama, it would appear, needs to be informed of one simple fact: there is no consensus. There has been a huge groundswell of opposition to this “stimulus” bill. However, he and the Democrats in Congress will march on with this type of legislation, however “non-partisan” they claim to be.

In addition to debt, the administration will need to raise taxes and print more money to function under this mindset of government spending as the cure for a struggling economy. We’ve already laid out how tax increases hurt the economy. Senator Richard Burr (R-NC) in an article for Human Events states that “Obama’s promise to raise taxes just on the Democrats’ ‘attractive target’ of people earning over $250,000, will only generate $225 billion over 5 years, far short of the $1.4 trillion which Obama’s proposed programs (actually only 60% of them) would saddle taxpayers with during that same time frame.” When looking at the numbers, one can see that the implementation of the administration’s spending goals will have to come with significant and widespread tax increases.

Also, though Obama himself does not like to mention it, if his administration follows the lead of those in the past, which is quite likely, he will have to resort to printing money to pay for his spending. Our currency has recently been devalued, mainly because of too much currency in the system. What usually follows an inflationary boom, where there is increased asset prices and cheap money, is a deflationary bust, where currency is devalued, prices fall, and money supply contracts as loans go bad. However, since our currency is not backed by anything, prices are not going to fall, but the currency will fail. As leading economic analyst Peter Schaff says, “What happens is, when you get the deflationary bust the government doesn’t let it happen. The government interferes with the market attempts to bring down real estate prices, to bankrupt companies – the government doesn’t want that happening. So what do they do to fend it off? They print money. They print money. They keep the spending going, they keep the money flowing, and what happens is the currency collapses and prices go through the roof.” The administration has not had time to do this yet, but if history is any teacher, and if we know anything about Obama’s economic plans, it will.

Friends, it has become clear that the new President will not act in the country’s best interest, and that he has a Congress willing to shut down debate about these issues. Again, I urge you to take action. Research the bills before Congress, call or email your “representatives,” and let your voice be heard. Now more than ever, the responsibility of creating a better nation for our children rests not in the government, but in ourselves.

Josh and Evan