Depending on who you talk to, you will hear that President Obama has either been a friend or foe to businesses on and off Wall Street, but nobody can argue that the economic decisions made by the Obama Administration have had far reaching economic effects. (This free thinker promoted free trade at a time when governments controlled most commercial interests. See Adam Smith: The Father Of Economics.)
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In celebration of the upcoming Halloween holiday, let's look at some of Obama's scariest quotes. When we use the word scary, we're not attempting to take a position on political issues but instead, recount some of the economic shocks that we have witnessed since Obama took office. We'll let Washington insiders and arm-chair politicians around the world form the political opinions.
- "We have begun the essential work of keeping the American dream alive in our time."
Obama made this statement on February 17, 2009 as he signed in to law the $787 billion economic stimulus bill. What makes this scary? Sticker shock! Americans knew that this number was big, but most can't fathom the size of such a bill. Fast-forward to 2010, let's ask the question, did the nightmare remain a nightmare?
The Congressional Budget Office, a non-partisan entity, released a report stating that this bill has created jobs. The report found that the stimulus bill has "lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points" and "increased the number of people employed by between 1.4 million and 3.3 million." This report was published in August of 2010.
- "… as popular as a root canal"
Obama said this about the Troubled Asset Relief Program (TARP) in October of 2008 when describing the public's opinion regarding providing aid to the very companies who caused the financial collapse. The scariest part of this statement? He was right. In fact, 59% of Americans objected to TARP in 2008 and although proponents of the bill sold it as an investment, many Americans believed that they would never get that money back. Some Wall Sreet CEOs employed extra security when in public because the American public was so angry.
Looking at TARP now, did Americans have reason to be scared?
In September of 2010 the U.S. Treasury Department released an analysis of the TARP program projecting that the American taxpayers will only lose $29 billion on the TARP program and most of those losses won't come from the vilified banks. Instead, the largest losses are projected to come from the relief given to the housing sector.
While large segments of the public still express anger and frustration over the TARP, proponents say it was necessary. Hal Reichwald, co-chair of the banking practice at Manatt, Phelps & Phillips says "It's hard to get the popular voice to recognize that it was important to save the big guys in order to save the little guys." (TARP is the government's attempt to forestall a deep, extended recession. Will it work? Check out Liquidity And Toxicity: Will TARP Fix The Financial System?)
- "We're not going to be giving people a free pass and we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives."
In late May of 2009, President Obama signed in to law sweeping credit card reform that was designed to protect consumers from fees that were reportedly driving consumers more deeply in to debt. Among the changes, the bill eliminated arbitrary interest rate changes and prohibited over-the-limit fees unless the customer agrees to it.
What's so scary about that? Those objecting to the act claimed that banks would find other ways to make money and they were right. Soon after the law was enacted, some customers received notice of a rate increase before the law went in to effect. Customers reported unexpected large interest rate increases over their original rate. Other banks were also raising fees and imposing new fees.
- "After a century of striving, after a year of debate, after a historic vote, health care reform is no longer an unmet promise. It is the law of the land."
Obama said this when healthcare reform passed and while this isn't primarily an economic milestone, it has far-reaching effects for the economy. What is scary about giving people healthcare? If you're a small business owner, scary may be an understatement.
According to factcheck.org, businesses with payrolls under $500,000 per year will be exempt from this requirement but for those with 25-100 employees, they could see healthcare costs increase by an average of $412 per employee while those with 10 or less employees could see as much as an $829 savings.
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The Bottom Line
Corporate water coolers around the world are the meeting place for political debates and issues such as these will be debated for years and decades to come but one thing can't be debated: The Obama Administration has already made an historic impact on the American economic system. (Taxpayers should be wary when a new "temporary tax" is introduced. Sometimes these temporary taxes are anything but. For further reading, refer to "Temporary" Taxes That Stuck.)
For the latest financial news, see Water Cooler Finance: History's Biggest Rogue Trading Scandal.
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