Obama's failed leadership

Jed Babbin:

President Obama has invited Republican leaders to the White House today for an “economic summit.” But it won’t be a “summit” at all: Obama plans to lay out his ideas for huge tax increases, massive reductions in defense spending -- including in Iraq and possibly Afghanistan -- and won’t seek Republican input to change his agenda.

Obama’s leadership failed its first two important tests, and is about to fail again. Last October, then running mate Joe Biden prophesied that Obama would be tested by a foreign crisis quickly. Biden told a Seattle audience that they’d need to stick with him and Obama because their decisions wouldn’t seem correct initially. He begged for time.

But the economic crisis challenged Obama’s leadership before our foreign enemies could. Obama has failed twice and there is little reason to believe his leadership will improve. His political character isn’t built on leadership skills. In the first two tests he hasn’t demonstrated it.

First, instead of crafting a stimulus bill himself -- or even actively participating in it -- Obama let the Pelosi Democrats run off with it. And their product was so bad -- so full of pork and costly liberal nostrums that pass enormous fiscal burdens to the states -- that several Democrats joined the unified House Republicans in voting against it. Now Obama is facing off with almost a dozen state governments that want to reject the money because of the strings attached.

The second failure was in building expectations about the new bank bailout plan that was announced last week by serial tax evader and Treasury Secretary Tim Geithner. Before Geithner unveiled the plan, Obama said, “He’s going to be terrific.” Again and again, Obama raised expectations, saying Geithner would be “clear and specific.”

Obama led the financial markets to believe that there would be a plan specific enough for them to rely on in making investments. But he defaulted to Geithner, apparently letting the supposed economic maestro devise and then describe a plan that was comprehensively vague.

Obama didn’t lead: he let Geithner go ahead with a plan so lacking in details that the spurred the markets to continue their panic. Geithner said, “We will have to adapt it as conditions change. We will have to try things we've never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted.”

Geithner promised instability in policy....

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According to press reports based on leaks of the speech (and the budget plan to be delivered to Congress Thursday) Obama will seek a hike in the capital gains tax, which is the surest way to depress investment in the economy. He will also propose spending cuts in defense as well as new spending programs on global warming and such. If ever there were a recipe for continuing our economic slide into a depression, this is it.

Obama is selling our economy short, and the stock markets will take that hint today and tomorrow. It is their form of rebellion, mirroring the states that are refusing the stimulus money.

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Raising the capital gains tax will of course be counter productive, but it makes no sense for another reason. The market losses have been so high that few people have any capital gains to declare this year. Obama has always been a nincompoop when it comes to capital gains even during the campaign he thought it was more fair to reduce revenue by raising the tax. Now with a deficit soaring out of control because of his "stimulus" he shows a determination for boneheaded tax policy that is hard to comprehend.

Then there is the cutting of military spending in the middle of a war. That will be a dangerous first for any President. We should be increasing our military spending to replace used up equipment and to stimulate the economy. The two greatest periods of growth in the US economy followed huge increases in defense expenditures in World War II and the Reagan years.