You have to chuckle at the AP headline which reads: “Obama urges spending curbs, hands out $15 billion.” But on a day when the Dow plummeted another 250 points and two consumer confidence surveys reached all time lows, this is no joking matter. The non-plan for a bank bailout, the mortgage bailout plan, the prospect of deficits as far as the eye can see, and the reminder that the Bush tax cuts will end in 2010 have sent investors scurrying and the markets plunging.
The AP explains that despite the presidential summitry and the stimulus bill, the economic players are not amused:
Obama summoned allies, adversaries and outside experts to a special White House meeting on the nation’s future financial health one week after triumphantly putting his signature on the gargantuan spending-and-tax-cut measure designed to stop the country’s economic free fall and, ultimately, reverse the recession now months into its second year.
At the same time, federal regulators announced a revamped program to shore up the nation’s banks that could give the government increasing ownership. It was the administration’s latest attempt to bolster the severely weakened banking system without nationalizing any institutions, which the White House has said it does not intend to do.
Wall Street showed it was unimpressed by all the activity. The Dow Jones industrials were down more than 200 points just before the close of trading.
Well, it really isn’t surprising. When a president talks doom and gloom and embarks on an announced course of big spending, high taxation, uber-regulation and nationalization, the private sector has a collective fainting spell. Or as the AP puts it:
One month into office as the economy continues its downward spiral, Obama is seeking to balance twin priorities: turning around dismal conditions with a huge injection of spending while lowering huge budget deficits. With his re-election race just a few years away, he also has an interest in avoiding being labeled as a big-government, big-spending Democrat.
Perhaps if he stopped acting like a big-government, big-spending Democrat both the markets and his re-election prospects would perk up. Unfortunately for the Democrats, elections don’t suspend certain economic realities. The reality is setting in — this administration has set out on a course that offers no reason for a prompt rebound. Apparently, they aren’t in fact offering much hope at all. (The tingle up the leg is gone as well.)