The exit strategy. It’s all the media could talk about for the last five years of the Bush administration. What’s the exit strategy? These days, you won’t see a single media outlet even mention it.
In the case of Bush, the exit strategy referred to our position in Iraq. In the case of Obama, the exit strategy refers to something very different. Obama has to get America off all these new government programs, and he has no clue how to do that.
We have so many new government programs, it’s tough to keep track. We have TALF (Term Asset-Backed Securities Loan Facility), TARP (Troubled Asset Relief Program), FSP (Financial Stabilization Plan), Obama Stimulus 1, maybe even an Obama Stimulus 2, the list goes on and on.
The TARP chief says potential U.S. bailouts so far have amounted to over $23 trillion. According to the U.S. Department of Commerce, the entire GDP for the United States in 2008 was only $14.33 trillion.
It doesn’t take Warren Buffett to point out that if you spend twice as much as you make, you are probably not going to be in good financial shape.
What’s even worse is that instead of bringing all of these new government programs to a close, Obama is extending these government programs as we speak.
Just last week, Treasury Secretary Tim Geithner and Obama extended TALF until June 30, 2010. Originally it was set to expire Dec. 31, 2009.
Two weeks ago, the Federal Reserve said that it would go ahead with a $300 billion purchase in long-term Treasuries and a $1.25 trillion purchase of mortgage-backed securities (MBS) all by the end of the year.
The spending is out of control. The U.S. annual deficit has exploded to $1.8 trillion; that’s almost triple the highest it has ever been in American history, and there’s no plan to slow that down anytime soon.
At some point, the party has to stop. Companies cannot be viable for the long term if they are dependent on trillions of dollars of unprecedented government handouts every single year.
But the problem is that the bailouts have grown too much, too fast. The bailout is double the size of the country’s GDP. The bailout is corporate candy.
Any parent knows that once you give your child a taste of candy, the child wants it all the time. What ends up happening is that when you don’t give your child candy, the child gets moody and cranky and demands the candy until he or she gets it.
The same is true of corporations. If they know that they can get trillions of dollars in government candy, they will complain, or lobby to Congress and the White House until they get all of they want.
Once you introduce a government program, it’s very tough to get rid of it. Just look at our existing ones. Social Security is insolvent, yet nobody wants to talk about modifying it in any way. Medicare and Medicaid just keep getting bigger and bigger while becoming more inefficient than ever. Government programs don’t stop, they just keep going and going.
If Obama and Geithner don’t come up with an exit strategy fast, we could have TARP, TALF, and the rest of these alphabet soup programs for the rest of our lives. They won’t be extraordinary programs to help save the U.S. economy, they will become corporate crutches from which we can never break free.
So President Obama, I ask you: You were critical of George W. Bush for not having an exit strategy during the presidential campaign. However now that the campaign is over and you have to be accountable for your decisions, where’s your exit strategy?
While President Obama may not have an exit strategy for all of this spending, the American people have an exit strategy, and it’s called Nov. 6, 2012, Election Day.
The question then becomes, who gets to implement an exit strategy first: Obama or the American people?
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