Obama Loses Touch With Economic Reality

While President Obama preaches the need for more economic stimulus, his counterparts in Europe are in full retreat from this failed policy. Germany, the United Kingdom and France have made cutting bloated government deficits their top priority to address economic recovery. National leaders in these countries have done a turnabout in facing economic reality. Yet Obama continues to cling to the notion that government spending is the best way to elevate the country out of the recession.

The stark contrast between competing policies was on full display when Obama urged the G20 nations at the recent economic summit to continue government pump priming. His words were greeted with icy silence. His audience included most of the European economic powers who are suffering from years of social spending that has saddled their countries with deficits as far as the eye can see.

Leaders in France and Germany joined together in calling for tougher European Union rules to prevent further economic chaos fueled by deficit spending. France went one step further, signaling that it may consider amending its constitution to make budget discipline a mandate for future French governments. That is unprecedented for a country that has prided itself in building generous social programs.

Not to be outdone, the UK government has ordered budget cuts of as much as 40 percent in some departments in order to slash a deficit running 11 percent of the country's economic output. The proposed spending reductions would be the deepest since World War II. Projections are that 610,000 government jobs will be lopped off.

Surveying the European economic landscape, the EU's central Bank President Jean-Claude Trichet said that government austerity drives aimed at deficit reductions will stimulate economic recovery. He added that "structural reforms" were fundamental to the growth potential for Europe.

These sobering economic maneuvers have been lost on President Obama. In a signature move for his administration, the President has treated the issue of runaway deficits as something of an academic exercise. His lone action has been to form a panel to study the problem and make recommendations. In a nod to politics, he ordered the panel to present its findings after the November elections.

Yet the United States actually faces a more acute deficit crisis than most of its European neighbors. The nation's deficit currently represents 11 percent of its total annual economic output, the same as the United Kingdom. Germany and France both have deficits that are smaller, as measured as a percentage of economic output. Even debt-saddled Greece comes in at 8.7 percent, according to figures from the International Monetary Fund and the Organization for Economic Cooperation and Development.

Meanwhile, the President and his party continue to ignore warnings about deficit spending. In a show of political arrogance, last week the house Democrats used procedural trickery to pass a non-existent $1.12 trillion budget deal. Instead of calling for a vote on a congressional budget resolution, Democrats attached a document to an emergency war supplement bill in deeming approval of the new budget. News coverage of the event was virtually non-existent.

Facing a record deficit and a tidal wave of debt, Obama's minions are taking the low road. The nation's total debt now stands at a staggering $13 trillion and counting. Budget deficits are growing at the fastest clip since World War II as the administration continues to refuse to accept responsibility for its reckless spending. In case you haven't heard, it's all former President Bush's fault.

Now some economists are talking about the dreaded "double dip" impact on the American recovery. The term suggests that there is a risk of dipping back into a recession after the economy had begun to claw its way back. This has prompted calls by some in Congress for the Son of Stimulus. This assumption underscores the absurdity of the administration and its supporters in the economic community.

The truth is the economy remains in a recession. It has never left this territory. Any cursory examination of economic numbers shows nothing much has changed in bank failures, housing foreclosures and unemployment since the recession began. In fact, in many ways, things have gotten worse.

Failure to recognize this truth imperils the country's future. More government spending will not cure America's economic ills. Fiscal responsibility is the only way for the nation to rise above its current economic malaise and to put it on the long path back to stability.

Don't take my word for it. Just ask Europe's leading economic powers.