Obama has botched the recovery

1. My opponent claims, "This debate comes down to whether you believe the economy is not recovering quickly because of a dramatic drop in consumer spending, or the fear that businesses have over an unsure policy future." I disagree. All recessions have a dramatic drop in consumer spending; it is not possible to have recession without that. The question is whether the policies of the Obama Administration have done a good job of restoring consumer and business confidence so that consumers will start spending again,businesses will start investing for the future. Clearly the policies have failed to restore anyone's confidence. We know the policies have failed for some reason, because recovery in the U.S. is substantially lagging the rest of the world and businesses are sitting with $2 trillion on the sidelines waiting for a promising future. Let's suppose that the mix of spending in the Stimulus was effective. I think that only the tax cuts had a significant effect, but let's suppose for the moment it was all effective. Then why would it be sound policy to be 19 months into the program with only about half the money spent? The point of stimulus is to inject money into the economy, so there is no possibility that not spending the money is good policy. Either the concept of the Stimulus was botched or he execution was botched, or both. The talk about "shovel-ready" projects makes one conclude that the execution was botched, because the supposed shovel-ready projects were not ready. Even a modest understanding of the government procurement cycle (specifications, solicitation, qualification of bidders, bids, evaluation, award, contracts, project plans, and reviews, all before work starts) would have precluded any foolish notion of "shovel-ready." In fact it didn't happen, and, for whatever reason, is the fault of the Administration. Virtually all of the recovery effort was in the Stimulus. Therefore, failing to spend the allocated money is reason by itself for affirming the resolution. If it ready did create two million jobs, which I do not believe it did, then all the money should have been spent by now to create four million, and not doing so is incompetent. Of the Stimulus money that has been spent, Con says that one-third went to tax cuts. I agree with Con that the tax cuts were effective, pretty much for the reasons that Con claimed them to be effective. Where we disagree is on the rest of the money. Not spending the money at all is, of course, ineffective, but spending it to create jobs at the rate of $194,000 per job is also inexcusable. Con claimed I did not dispute the CBO estimates of 1.4 to 3.3 millions jobs somehow created indirectly, but I did dispute it. The original promise of the Administration was that jobs would be counted on recovery.gov and that we could rely on those numbers. About 8 million jobs have been lost in the recession, and recovery.gov says that 750,000 were created. We need to create an additional 1 million jobs per year just to keep up with population growth. Even the 750,000 is suspect, because those are unaudited estimates of recipients. The original ground rules showed the Stimulus to be ineffective, so the ground rules were changed to the CBO claims. That is reason enough to doubt the CBO estimates. However, the huge range of 1.4 to 3.3 million jobs shows they are just guessing wildly, no doubt under political pressure. 2. The Stimulus was ineffective because of half the money being unspent and two-thirds of the rest being poorly spent. However, rather than focusing on the economy as top priority, the Administration went to extremes to undermine confidence in the recovery but initiating major new and uncertain health care costs, uncertain financial regulations, threats of expanded unionization, and promises of dramatic increases in energy costs. a. Con says it makes no sense that insurance companies have to increase their premiums to cover children under 26 now forced on to parents policies. It makes sense because it is not possible to insure more people at the same cost. People in the 18-25 age group do not have many disease-related health problems compared to older people, but they certainly have health problems. That age group is also disproportionately susceptible to accidents, drug and alcohol abuse, and gang violence. Ultimately Obama care will cover 40 million people at enormous cost. Most of that cost will be born by health insurance policy holders. For example, the $500 billion coming out of Medicare will have to be made up by the elderly who lost the benefits. Con dismisses the cost of filing 1099 forms because the are not due until 2012. The costs start immediately because account system changes, like new software, have to make to prepare for the data collection beginning on January 1, 2011. The 1099 costs, like the tanning salon tax, provoke fear of additional surprises buried in the health care bill. Increasing demand without increasing supply will drive up costs dramatically. Con claims that the free market will create more doctors and medical professionals. The supply is inelastic, o in the free market prices will rise sharply.. There is abut a twelve year lag due to the time it takes to train a new physician. There are serious limits on the sizes of medical school classes imposed by the lack of availability of instructors. Professionals educated overseas must still complete residency in the US, and those slots are currently at capacity. b. the Financial Reform act poses many uncertainties, and that uncertainty hangs as a fear over businesses and consumers alike. We are already seeing increased bank fees and tightening of credit. The requirement of every financial institution to have an affirmative action office to hire minorities into the industry is rand new and unprecedented overhead. c. Con claimed that businesses are not worried about cap and trade. How could a business that depends upon energy not worry about doubling or quadrupling energy prices? The reason the legislation stalled in Congress was the worry of representatives from the mid-West about the destruction of heavy industry. California, ahead of the curve, has dramatically increased energy prices. The result was half the heavy industry leaving the state. The oil industry is second only to tourism in the Gulf States. It is unrealistic to suppose that BP is going to support all the lost jobs forever. If nothing else, it would drive the American subsidiary of BP into bankruptcy. The increase in foreign dependence on oil is not treated at all by BP's temporary relief. d. The article on the fear of card check said, "Unsurprisingly, business advocacy groups oppose it - the National Federation of Independent Businesses, the American Small Business League, ..." Con erroneously claimed that there was no expression of widespread opposition to card check. Con claims that costs of doubled salaries can be passed on to consumers. Con did not counter the reasons I gave why that is not true. If labor costs were truly of no consequence, then any country could set a minimum wage of $100 an hour and end poverty. That obviously doesn't work. 4. Most small business are Type S corporations, filing as individuals. Half the proposed tax increases would come from small business. It hasn't passed yet, but it is announced policy that has given business another reason to doubt their future. 5. I gave five ways in which the Administration could restore the confidence of business in the future of the economy. If business had confidence in the future, they would invest. Consumers would gain confidence from the improved business environment. They would believe they could stay employed. consumers could also stop worrying about skyrocketing health care costs, energy costs, and taxes. Con did not refute those claim. Obama botched the recovery. The resolution is affirmed.