There is no Santa Claus.

President-elect Obama is giving me a good bit of material for this post. He is outlining his new economic plan, a potentially trillion+ dollar (that is 12 zeros) bill that, at any other time, would be laughed out of congress as the largest pork plan ever.

There were 8 things that stuck out to me as being worthy of note from this speech.

1.) President-elect Obama opened up by saying that this recession could last for years. In my opinion, that statement is intended to clear him of wrongdoing if this trillion dollar spending plan does not actually work.

2.) One of the points that President-elect Obama emphasized made was that only the government can pull America out of this recession. My question is: Why? He says that only the government can make the sort of spending necessary to push the economy forward, and that businesses are too limited by credit and the like. But, he should remember, there is no Santa Claus. This money the government wants to spend has to come from somewhere.

3.) President-elect Obama did admit that yes, this trillion+ dollar plan will greatly inflate the federal deficit. But, he asks his listeners to consider the alternatives. We might have a REALLY BAD recession...

4.) Another thing he said that scares the heck out of me was something along the lines of "It is now the job of the government to end this destructive economic cycle of bubble and burst, and create a new, stable economy." I am sorry, even Reagan could not rewrite the laws of economics. The trick is to promote policies that play the economy to its fullest potential within those laws. There will always be bubbles and bursts. The question, therefore, is not can we eliminate the bubbles and bursts, but rather, can we limit the negative impact of the cycle. President-elect Obama is approaching this the wrong way.

5.) The President-elect flat out admitted that a spending plan of this magnitude is unprecedented (it is both in actual dollars and adjusted dollars), but he justifies it by saying that so is the crisis we face. Really? Is this crisis an entirely new phenomenon? Or is the magnitude one that America has never faced before? Has Obama never heard of THE GREAT DEPRESSION? During the Depression the unemployment rate in America was around 25%. Right now our unemployment rate is not even in double digits yet. The Depression lasted essentially from 1929 to WWII, a span of about ten years. We have not officially been in a depression for more than a couple of months. Lets consider his justification for this spending plan. It is a statement aimed at the uninformed, making a mockery of the intelligence of the rest of us who don't just accept everything Obama says as God-ordained truth.

6.) "We must reform a weak and outdated regulatory system." I wonder if Obama means that he is going to strip all of the unnecessary government regulation that has been imposed on both the financial and auto industry... Oh, right, he means more regulation. Yeah, that's gonna help.

7.) Obama said towards the end of his speech that we as Americans should not ask what is best for us right now, but rather what is good for the country our children will inherit. This is an effective counter argument to all of what he has said in this speech. The money for this plan has to come from somewhere. My generation and my future children's generation are already footing a debt we still cannot fathom. And Obama wants to add over $1,000,000,000,000 to that? This whole thing is about trying to avoid as much pain at the present moment. Nothing in Obama's plan is truly good for future generations.

8.) Obama rightly pointed out that there are many Americans who are skeptical of this spending plan, because the government has already thrown hundreds of billions of dollars at the problem. However, the president-elect argues that this spending plan is different because we are not throwing money at the problem, we are investing in the future through new infrastructure, etc. This argument may have some merit, but there is still strong reason to have doubts about the government spending any more money to address this problem.

Those 8 things are just tidbits from Obama's speech that made me very uncomfortable. I am sure there were other important things he said, but I did not have time to catch them all.

And now, some suggestions as to how Obama could help the economy through the government:

A.) Cut the tax rate for corporations from 35% to 20% or below. That money could be used much more efficiently by businesses than the government. Yes this could cut government revenues (maybe, the Laffer curve might argue differently), but if the government would cut spending like Obama promised on the campaign trail, then the offset of the revenue would not matter while still stimulating the economy and promoting free-markets.

B.) Update regulations, but the other way. Remove them. Let the markets work, especially the auto industry. It can be argued that regulations and pressures by the U.S. Government put the financial, auto, and housing markets all into their current spin. Lets move towards free markets again and stop this trend towards socialism that we are sprinting towards.

C.) We are in a recession, no doubt about it. And yes, times will be tough. But, if we bite the bullet in the short term, we can make a real investment in the long term. At the moment, we are merely trying to hold off the inevitable problem while creating even more problems. Obama has said many times that there is a right way of doing things and a wrong way. The way we have been doing things the last couple of months is the wrong way.

I hope this has been enlightening, or at the very least, thought provoking. As always, comments are welcome.