Conservative Principles Now

When President Obama was inaugurated one year ago, the US economy was struggling. In his address he noted: “The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth…All this we can do. All this we will do.”

So how did he do? Badly.

First, he boldly and swiftly went on a spending spree, bailing out US auto companies and passing a $787 “stimulus” bill that promised to create 3.5 million jobs. Instead, America has shed 3.4 million jobs, driving the unemployment rate from 7.2 to 10 percent since last January.

Next, he spent $100 billion expanding SCHIP and authored a budget that increased discretionary spending by 8 percent—a quiet yet swift reversal of his campaign pledge to enact a net spending cut.

Meanwhile, he’s totally ignored the largest and fastest growing programs, the budget-busting entitlements that are in desperate need of reform. Initially he pledged bipartisan cooperation and fiscal responsibility, but then quickly abandoned it to try to force Congress to pass a new, expensive health care entitlement that lacks bipartisan support.

Remarkably, he went on to invent a new school of economic thought—one that will probably not get him a second Nobel Prize—which is the first to claim that it’s a good idea to raise taxes in a recession. He’s supported raising taxes to pay for health care and his cap and trade energy policy. With rhetoric that continues to be more powerful than his ability to actually legislate, this alone has been enough to frighten small businesses and slow recovery.

And, when all was said and done, he ran a record $1.4 trillion deficit. Over the next ten years, his budget comes up $13 trillion short, adding more debt in one decade than has accumulated in the US from 1789 through 2008 combined.

As the economy continues to hemorrhage jobs, growth prospects remain weak, and spending and debt pile up, it might now be time for some real change we can believe in.

Sunday, CIT Group, with $71 billion in assets one of the largest small business lenders in the country and the recipient last December of $2.3 billion in taxpayer money filed for bankruptcy. It was the fifth largest bankruptcy in US history.

Monday, nothing much happened. Stocks didn’t collapse. There was no panic. In fact, all of the major US stock indices actually went up. Even a tracker of all of the financial stocks in the S&P 500 stock index only lost about 0.14 percent. CIT’s failure was pretty much a complete non-event.

Now, there is substantial proof that there is no further need for TARP, and there is every reason to end the program as quickly as possible. TARP’s continued existence will make it a political slush fund available to meet the demands of whatever powerful interest group feels the need for taxpayer help. The latest such group is the smaller banks, but if the collapse of a major financial didn’t cause more than a small ripple in the economy, it is hard to argue that comparatively tiny banks will cause much more. After all, there are about 8,400 of them, and while several hundred may fail in the next year or so, new ones are chartered on a regular basis.

The good news is that the financial crisis is clearly over. The bad news (and there always is some) is that the taxpayers’ $2.3 billion vanished in a puff of smoke – one of the debts that will be extinguished in the bankruptcy. This offsets much of the profits that the government made when several banks repaid their TARP advances, and is a reminder that TARP was a gamble that paid off by helping to stabilize the financial sector, but could still cause billions of dollars in losses. Further recycling TARP repayments to small banks, auto companies, or whatever other industry comes along will only increase those losses.

The crisis is over, and it is time to close TARP. It served a purpose, but now it is time to recoup the tax dollars that went to fund it.