Minnesota Real Estate Investors Association, Inc.

Minnesota Real Estate Investors Association, Inc.

The Obama Administration Wants to Partner with the Private Sector


Geithner unveiled their plan to aggressively combat the so called worst crisis in seven decades. They are saying that their plan of over $1 trillion dollars is designed to get the frozen credit markets functioning again. See their full plan outlined at Yahoo News.

Let’s break this down using common sense. I know, for some people I will need to explain common sense. Common sense simple means that we look at the facts and come to a reasonable conclusion based on the most likely outcomes. There is also one other item that needs to be looked at if we are using common sense, and that is the desired goals of the planners and whether or not they have been disclosed. However, the advantage of common sense is that we can actually discover the desired goals of the planners if we properly apply common sense.

The Obama administration wants to push down our thoughts a $1 trillion dollar social engineering program and they are disguising it as an Economic Recovery Package. So let’s look at the facts. First of all, most of the spending in this pork package will not start until 2010 and the spending plan is designed to end in 2019. Does that sound like and emergency recovery package designed to free up our credit markets right now? Using common sense, the answer is no. How much of this plan is designed to help the credit markets, as far as we can tell, there is nothing in his plan that directly helps the credit markets.

So what is in the bill?  
Clean, Efficient, American Energy: $54 billion
Transforming our Economy with Science and Technology: $16 billion
Modernizing Roads, Bridges, Transit and Waterways: $90 billion
Education for the 21st Century: $141.6 billion
Tax Cuts to Make Work Pay and Create Jobs: 95% of American Workers
Lowering Healthcare Costs: $24.1 billion
Helping Workers Hurt by the Economy: $102 billion
Saving Public Sector Jobs and Protect Vital Services: $91 billion
Here's the full 13-page summary from the Appropriations Committee.

While all of this sounds good, what makes this so important that if we don’t pass it right now, the world will come to an end? There is nothing in here that will start immediately and nothing in here directly address the economic problems. Common sense tells us that they need something to help the banks with their non-performing assets. That is where the partnership comes into play. If this is truly an economic recovery plan, then the Obama administration needs the Private Sector for the recovery, thereby allowing the economic recovery plan to pass and make the public believe that the recovery was part of the spending bill, when common sense tells us otherwise.

Let’s take a quick look at what is really happening in the markets right now. They only spent the 1st half of the $700 billion TARP funds that the Bush Administration passed back in October. They still have the other $350 billion dollars waiting to be spent. Most banks want to start lending but they are being pressured from two different governmental agencies. The housing and finance committee is pushing the banks to start lending, and the banks are saying that they can and want to. However, the regulators are telling the banks that they need to raise an additional 2% percent of cash from depositors in relation to the banks overall assets. So while the banks want to lend they have been given stricter regulations which is temporarily preventing them from doing so. While 2% may not sound like a lot, it is when you consider that the reason consumers are not saving money right now is because the credit is temporarily frozen forcing people to spend more money now to live on rather than save money in the banks.

The funny thing is that even though the regulators have imposed stricter requirements on the banks, people are just now starting to get caught up and putting their money into the banks and the banks are finally being able to start lending again. That is why I believe that the Obama administration wants this so called economic recovery package passed as quickly as possible. They are using fear tactics to push it through congress so that it passes before the markets can fully recover, at which time, the Obama administration will be able to take credit for the recovery. However, if the so called economic recovery package doesn’t pass quickly and the credit markets begin to recover on their own, then the Obama administration will not be able to get their massive social engineering bill passed.

My proposal is to let the private sector do what they have already been doing, fixing the markets. We don’t need to partner with the government to make this work. However, the government needs to partner with us to get their social engineering plan in place. Take if from experience, partnerships almost never work out the way they were intended to. We were never meant to partner with the government, the government was supposed to support us and work for us, not the other way around.




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