Obama, Stockman, and Krugman – Wrong Plans For America!
It’s been an interesting week in U.S. economic and financial affairs. Three prominent men offered widely different ideas on what’s wrong in America and how to fix it. However, none of them even hinted that we’re losing a global trade war badly and need to take corrective action now. Instead, here’s the essence of their plans to “kick the can down the road” while America’s “Rome” is burning out of control.
First, President Obama authorized his U.S. Special Trade Representative to move ahead on a high-priority plan for a big new free trade agreement (“FTA”) with the European Union. That’s in addition to another major new FTA, the Trans-Pacific Partnership with eleven Pacific Rim countries. Both of these deals will be far more damaging to the U.S. economy and jobs than the much-maligned NAFTA that Mr. Obama campaigned against in 2008. They will add hundreds of billions to our annual trade deficits and foreign debts, but. Mr. Obama is forging ahead. What planet is our President on with these plans when we’re already running $600 billion annual trade deficits that are killing our economy and jobs?
Next, David Stockman, former Budget Director under Ronald Reagan and a successful leveraged buyout executive came out with a 780 page “tell all” book titled : The Great Deformation: the Corruption Of Capitalism in America. According to Mr. Stockman, the secret to managing our economy well is clever financial manipulation in Washington and a firm belief in the “free market”. As to our huge trade deficits that Mr. Obama ignores, Mr. Stockman blames it on our lower and middle classes for “living high on the hog” buying cheap imported goods that they really don’t need. The fact that U.S. multinational companies moved their jobs overseas was just the “free market” at work. So we must preserve U.S.“free trade” policies even if foreign competitors don’t reciprocate with U.S. exporters.
And last, there’s famed economist Paul Krugman. He dismissed Stockman’s book as nonsense, But he also didn’t admit that his own insistence on government spending to stimulate consumer demand hasn’t worked. Like other Keynesians, Krugman forgets that more consumer spending to buy imported consumer goods mainly creates jobs in the exporting nations, not here in the U.S. Instead of borrowing to pay for imports and trade deficits, we need to reduce the flow of imports into America and put our people back to work making the things we need.
I suggest that now may be the time to reach a real national consensus by Mr. Obamataking the lead to bring these men together along with a few business leaders and several top people from the trade policy advocacy community. The U.S. isn’t helpless in the midst of so much adversity and disagreement on solutions. But we must all get on the same action page, and we must do it now!
Mr. Davis was a former U.S. Ass’t Secretary of Commerce, and also a former IBM Corp. VP and Chief Financial Officer