- The Washington Times - Monday, January 4, 2010

ANALYSIS/OPINION:

We enter another new year, a time of fresh beginnings and maybe even a bit of optimism that we may dare to hope things will get better for our country, our families and ourselves.

To be sure, it’s hard to be hopeful in the short term when our country is beset by so many policymaking failures, challenges and divisions.

The past year certainly has been a time of turmoil and uncertainty for so many Americans who are out of work and struggling to make ends meet, or have lost their homes to foreclosure, or businesses that have been shut down by the recession. Many have lost loves ones in the Afghanistan and Iraq wars or have been hurt by other personal tragedies.

A large majority of Americans think our country remains on the wrong track and that things are still headed in the wrong direction. The Gallup poll finds that 60 percent of us believe the economic outlook is getting worse.

Economically, at least in terms of unemployment, this has been one of the severest recessions since the early 1980s. It began near the end of 2007 and two years later shows no conclusive evidence that it has ended. Indeed, most economists are forecasting a tougher year ahead when jobs will remain scarce and economic growth will be painfully slow.

The government has spent trillions of dollars in an attempt to put the economy back on its feet, and there are flickering signals that it is showing signs of attempted recovery.

But clearly President Obama’s policy of massive federal spending is not working and is arguably making things worse, driving up taxes and debt that have become a huge drag on the U.S. economy - eating into the nation’s earnings and suffocating capital investment.

Increasingly, economists are concluding that, like a Ponzi scheme, the spending stimulus is not and cannot be sustainable, that once the money stops so does the stimulus, if any, it produces. The most recent example of this was the Cash for Clunkers program. When it ran out of money, car sales dropped again, and taxpayers were left to foot the $3 billion bill.

Where the economy has shown signs of life, it has been largely due to private sector innovations and cost-cutting decisions aimed at improving their bottom line, selling underperforming assets, and seeking out new capital infusions to pay their bills and survive. Trade has helped many global businesses get through this recession as well.

Existing and new home sales have been climbing, housing construction starts are up, durable goods orders have risen modestly from time to time. But no one is expecting this economy to take off as it did after the Reagan tax cuts, because Mr. Obama is preparing to impose higher taxes and new regulations on every sector of the economy, from health care to energy.

But despite the administration’s plans for Europeanizing the U.S. economy, don’t underestimate the ability of American capitalism to find a way to grow and in some cases override the government’s hostility - if not here at home then in global markets where the return on investment may be greater.

Meantime, the world is becoming a much more dangerous place now that the Obama administration is effectively ending President Bush’s war on terrorism.

The Taliban and al Qaeda insurgencies have grown more aggressive since

Mr. Obama has released classified information about U.S. interrogation techniques; stepped up his drive to close down Guantanamo Bay prison in Cuba and move terrorist detainees into the United States where they will be put on trial in civilian courts with all of the procedural delays their attorneys can muster; and announced in advance when he will be pulling troops out of Afghanistan.

Mr. Obama’s argument in closing down Guantanamo is that the prison is being used by the terrorists as a recruiting tool. But it is the height of folly to think that transferring these terrorist combatants to U.S. prisons here will in any way deter them from signing up more Muslim fanatics.

The Taliban has been stepping up its attacks in Kabul and elsewhere in Afghanistan in the belief they can topple its government as soon as U.S. troops begin withdrawing in 2011. And they have become a greater threat in Pakistan where Taliban forces have dispersed into major cities where they’ve accelerated their offensive and are making every effort to get their hands on its nuclear weapons.

Taken together, Mr. Obama’s policies are sending a dangerously uncertain signal of their reluctance in the war on terror.

But whatever challenges we face now, I remain an optimist about the future. Americans are a resilient and resourceful people who are quick to acknowledge mistakes and to fix them. Ten months from now we go to the polls in the midterm elections to begin doing just that.

Donald Lambro is a political reporter and analyst.

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