It's the Economy Stupid!

Frankly, I think the time has come to stop talking about BP, The Gulf Oil Spill or the Ecological disaster caused by it. Yes, it is the greatest man-made disaster in history. Yes, it will affect the beauty of the beaches in the Gulf. Yes, it will cause wildlife damage for decades. But: Enough! The Gulf is a problem. But, it is not the biggest problem facing our country at the moment. It will be cleaned up and the flow of oil will eventually stop.

The only thing about the Gulf that is good for the Obama Administration is that it is causing the rest of the country to forget the disaster that it is the US Economy right now. And, of course, the spin doctors in the White House are doing their best to keep the country and media off of the economy. Maybe that is why the Obama Administration wants everyone thinking that he messed up in the Gulf. As long as the Gulf Oil Spill is news, the economy is being ignored and Obama does not have to answer for his mess ups in that regard.

Yesterday, the Consumer Price Index was released for the month of May. It showed a .2 percent drop. The April number showed a .1 percent drop. That means we have now had two consecutive months of deflation which is surprising considering that the government is spending and printing fiat money likes it is going out of style. Deflation is one of the worst things that can happen to an economy. When prices go down, companies do not hire, people do not spend because of fear of job security, corporate profits go down and unemployment starts to go up. It can then become a spiral that gets out of control as it did in the 1930s during the Great Depression and Japan in 1990s.

This is further compounded when you look at the employment numbers for the past week and for the month of May. Last week initial jobless claims went up to 472,000. This was the third week in a row that the numbers were higher than expected. Continuing claims also rose to 4.57 million; which was also unexpected. The unemployed or underemployed continue to rise even though it is not shown in the official numbers because many are falling off of the unemployment roles.

Two weeks ago President Obama made a big deal about the unemployment rate dropping a percentage point. It is still 9.7% however which is higher than anybody expected and way above the 8% cap that the failed stimulus bill was supposed to hold it at. He also bragged about the roughly 450,000 new jobs that were created during the month. He bragged until everyone pointed out to him that 410,000 of them were temporary census workers and only 40,000 jobs had been created in the private sector.

Once that had been brought up, the bragging from the White House stopped. What did Obama do? He started talking about the Gulf. He didn’t talk about the Gulf for the six prior weeks except in passing. But, now he’s obsessed with it. Take the mind off of the real crisis that will cost him votes and spend time on something that he hopes can make him look good. But, of course, that is failing too. His speech on Tuesday night was an unmitigated disaster seen as such from both the left and the right.

The speech did have some effect though. It strong-armed BP into putting more than 20 billion dollars into the White House’s hands for the victims of the Gulf Oil disaster. That is right, I used the term “strong armed.” So did Texas Republican Congressman Joe Barton. He has been castigated by both parties because of it. I hope I am too. Barton is right. This tactic used by the White House is just another example of the Chicago thugs in action.

This matter should have been resolved in the courts by BP interpleading the money into the court system. BP has said from the beginning that it will pay for the damages caused by the spill. Now, BP has kowtowed to the White House and what will happen?

We will have another czar hired to divvy up the fund. He will hire another 50 or so people to administrate the fund. They will hire lawyers, accountants, etc., to evaluate the claims. And, who will pay for this new public entity? It will either come from the fund or from the taxpayers. If it comes from the fund, then BP has just created another bureaucracy of which none of the money will end up in the hands of people who need it. If it comes from the taxpayer, I say why? More big government, more public sector jobs: No help for the little man or the small businessman. Obama just does not care. He does not care about Main Street or the wreck that is the US Economy.

That seems to be the main mindset at the White House these days. He talks about caring and hope and change, but he doesn’t. He sits there all day listening to advisors and makes no decisions. However, he does play a lot of golf. President Bush played some and was castigated for it. The man sitting there now plays much more.

And, when he does make decisions they are not always in the best interests of the country. This morning, I read an Article on the Obama White Diaries: http://www.obamawhitehousediaries.com/. The Article talks about the President abandoning a portion of Arizona 80 miles away from the Mexican border because it is too violent. The Mexican drug cartels make it too dangerous for Americans to travel into the area. This is part of the United States. This is not Mexico we are talking about. It is not even a border town.

Instead of investigating the Arizona Immigration law, the Justice Department and its chief Eric Holder, should put the FBI and US Troops into this area and clean it up. Get the Mexican drug lords out and make it part of Arizona again. Of course, if Arizona does it themselves, it will be castigated even more by the Central Government.

A strong enforcement of the immigration laws is another way to help the economy. Get rid of the illegals and maybe the unemployment rate will drop a few points. Protect the border and more jobs will be created. However, this will just infuriate another Democratic voting block. And, we already know, that is the last thing the President wants or needs at this point based upon his recent poll numbers.

So, what does he do instead? He talks about kicking ass over the Gulf Oil Spill. After all, it makes people forget the real problem facing the country: “it’s the economy stupid!”

© 2010 by Frank T. DeMartini