- The Washington Times - Thursday, November 26, 2009

ANALYSIS/OPINION:

It has taken nearly 10 months for Democrats to face reality, but it’s finally dawning on some of President Obama’s allies in Congress that his economic policies aren’t working.

As unemployment rates continue to climb into the double digits and new reports of layoffs appear weekly across the country, Democrats are feeling the heat from angry constituents and party leaders back home and some of them have begun to complain - loudly and publicly.

The party’s rebellion broke into the open last week when Oregon Democratic Rep. Peter DeFazio, a leader of the Progressive Caucus, a band of liberal House Democrats, said there was a growing demand in the caucus for the resignations of Treasury Secretary Timothy F. Geithner, and others on Mr. Obama’s economic team.

“The populist caucus is considering questions regarding both him and some other members of the economic team in the near future,” Mr. Fazio told MSNBC, hinting that White House economic adviser Lawrence H. Summers should also be removed.

Trouble has been brewing for sometime among Democrats on Capitol Hill as vulnerable lawmakers talk of rising voter discontent over the failure to create jobs, as well as their own mounting disapproval polls that now threaten their re-election.

Rumblings are growing within the House Congressional Black Caucus, whose members say their black constituents are getting hit especially hard by jobless rates that have climbed to 16 percent. In retaliation, they’ve blocked action on the administration’s financial regulatory reform package, demanding Mr. Obama do more to help blacks who helped put him in the White House.

Their complaints triggered a hastily arranged hand-holding meeting last week with black caucus members, Mr. Geithner, Mr. Obama’s Chief of Staff Rahm Emanuel and Rep. Barney Frank, Massachusetts Democrat and House Financial Services chairman. Mr. Frank stunned committee members when he told them the regulatory bill was being held up because of the black caucus’ anger over the failure to create jobs.

But the growing rebellion over the administration’s jobless economic policies goes beyond Congress. The AFL-CIO, the National Association for the Advancement of Colored People, the National Council of La Raza, among the White House’s other allies, are escalating their criticism, too. At a joint event here last week, they said that mounting unemployment was “the worst crisis in America today,” urging the West Wing to push other priorities aside to concentrate on job creation and the economy.

Unfortunately, their proposal was another stimulus to pump billions of dollars more into further job creation programs, a wrongheaded idea that appears to be gathering support among Democratic leaders as evidence mounts that stimulus No. 1 isn’t working.

Mr. Obama promised that his stimulus plan would deliver 3.5 million jobs and keep the unemployment rate below 7.8 percent. Eight months later, the jobless rate is at 10.2 percent and 3.7 million more Americans are without work.

And it is not going to get better anytime soon, according the Federal Reserve Board Chairman Ben S. Bernanke. In remarks last week, he said the economy was in for a long period of slow economic growth and a longer period of high unemployment. He didn’t say so, but my guess is he believes the economy won’t improve faster than it should because of the president’s no-growth economic policies.

Someone once said the definition of crazy is doing the same thing over and over again and expecting a different result, but that is what these and other liberal Democrats are proposing. The answer to the problems we face in this sorely anemic economy is not more government spending, but more private capital investment in an economy that has been the greatest job producer in the world but is now being slowly starved to death by mushrooming borrowing and debt that has left capital markets weak and undernourished.

Mr. Obama ran for president by convincing enough Americans that the idea of cutting income tax rates on businesses, investors and workers was somehow responsible for the recession and that the answer was to borrow trillions of dollars that government would spend to create jobs.

But we are seeing the failure of that policy every day and why it is an unsustainable Ponzi scheme. Like the Cash for Clunkers, it may have led people to buy cars for awhile, but when the money ran out, car purchases stopped, and taxpayers were left holding the bag for the $3 billion in added debt. Similarly, early reports on the borrowed stimulus money that is trickling down into the economy through costly bureaucratic government programs may pay for some jobs in the short-term, but when the money runs out, so do the jobs.

Permanently cutting taxes on income, capital gains and investing, on the other hand, is a far more efficient, long-term way to inject new and needed capital throughout the entire body of the U.S. economy to boost business expansion, consumer spending and increased economic growth. It worked in the Kennedy tax cuts of the 1960s, the Reagan tax cuts of the 1980s and the Bush tax cuts that pulled us through seven hard years of cataclysmic economic upheavals until the housing bubble burst.

Those tax policies can work for us again, but sadly a long, unending line of tax increases and failed spending programs are in our economic future under Mr. Obama’s increasingly divisive presidency.

Donald Lambro is chief political correspondent of The Washington Times.

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