The Standard is Poor

His speech may have inspired the nation, but President Obama's economic cheerleading failed to make a believer out of Wall Street. Despite today's bleak news on the trading floor, the comforter-in-chief seemed to accomplish what he set out to do on Tuesday night--raise the spirits of grassroots Americans. Before last night's speech, confidence in the country had tumbled. While an overwhelming majority approved of President Obama (62%), nearly 80% agreed that "things are going badly in the United States." By a noticeable margin, the President has become more popular than his policies.

While people respond to his rhetoric, the market responds to reality--which is why investors have seen an interesting trend each time the President's outlines his agenda for the economy in a major speech. Obama's stock goes up, and the Dow goes down. Like a truth indicator to the President's plans, Wall Street tells us what Obama will not: financial experts have serious misgivings about the administration's approach to the crisis. The correlation below is really quite striking. When the President speaks, the market listens... and crumbles.

• November 5, 2008 (Wednesday after Election Day): -486 (5.0%)


• January 9, 2009 (one day after Obama speaks at George Mason University on "need" for $800 billion stimulus package): -143 (1.6%)


• January 20, 2009 (Inauguration Day): -332 (4.0%)


• February 10, 2009 (one day after Obama declares that without a stimulus, "an economy that is already in crisis will be faced with a catastrophe"): -382 (4.6%)


• February 17, 2009 (market opens for the first time after Congress passes $787 billion stimulus on February 13; Obama signs bill into law, declaring, "The stimulus lets Americans claim destiny."): -298 (3.8%)


• February 19, 2009 (one day after Obama announces potential mortgage relief plan): -90 (1.2%)


• February 25, 2009 (one day after Obama's first speech to the full Congress): -80 (1.1%)

Pig Pen: Obama Signs Pork Package into Law

With one stroke of the pen, President Obama vaulted into the record books yesterday, signing what may stand as the largest spending bill ever passed in the history of America. The legislation itself is eight inches thick, so large, a White House aide joked, that it "needed to be strapped in with a seat belt on Air Force One."

Instead of relieving debt, President Obama's "stimulus" is expected to add $9,400 more debt to every family in America. According to the Congressional Budget Office, that may be a modest estimate. If the programs created by the stimulus are made permanent (as the late President Ronald Reagan said, "A government bureau is the nearest thing to eternal life we'll ever see on this earth!") the 10-year cost of this bill will be $3.27 trillion--almost triple the initial amount. Let me put that into perspective. If we spent a dollar every second, it would take 31,688 years to spend one trillion!

Unfortunately for U.S. taxpayers, there seems to be no caboose on this money train. The ink had barely dried on the stimulus before President Obama called for another $50 billion to stabilize the housing crisis. The auto industry is also striking while the money press is hot, lining up for another $17 billion handout--on top of the roughly $20 billion carmakers already received from Washington. Wall Street's finest are not far behind, as plans for a TARP 2 (Troubled Assets Relief Program) are already underway.

Obama: Up to His Earmarks in Pork

Yesterday, President Obama was back in campaign mode, hoping to engender the same affection for his massive stimulus bill that he did for his candidacy. This time, voters are noticeably more skeptical. In Indiana, Obama abandoned his trademark optimism and warned that without his trillion dollar spending spree, we would be turning a "crisis into a catastrophe." He defended his recovery plan--but not without telling a few whoppers about the intricacies of his plan.

To a roomful of Hoosiers, Obama said, "Understand, this bill does not have a single earmark in it, which is unprecedented for a bill of this size. There aren't individual pork projects that members of Congress are putting into this bill." In truth, it depends on how the President defines the word "earmark." A majority of Obama's projects are wasteful, special interest spending programs. If the Coast Guard's $255 million "polar icebreaker" doesn't qualify as pork, what does? Maybe the $3 million tax benefit for people with golf carts or ATVs?

Obama bragged, "The plan that we've put forward will save or create three million to four million jobs over the next two years." As the Associated Press points out, those numbers are impossible to substantiate. "The president's own economists... stated, 'It should be understood that all of the estimates presented in this memo are subject to significant margins of error.'"

Despite voters' displeasure, the stimulus bill passed the Senate today, paving the way for some high-stakes bargaining between the chambers. Democrats have already indicated that most of the Senate cuts will be put back into the final legislation during the House and Senate conference. According to the Congressional Budget Office, the "compromise" expected to pass today will cost $18.7 billion more than the House bill. Sen. Claire McCaskill (D-Mo.) said, "I do think that there was some spending in the bill that was makeup for a starvation diet under the Bush administration, some important priorities of our party." A "starvation diet" is hardly how I would characterize Bush's two terms, in which federal spending ballooned by more than 20 percent!

Unfortunately, this is just a tidbit of what the administration has in store over the next few months. On the threshold of an unprecedented $1.3 trillion stimulus, the President is moving forward with "phase two" of the Troubled Assets Relief Program (TARP), created to rescue Wall Street. In TARP 2, the Treasury Department has floated the possibility of spending up to $150 billion in new bank bailouts, shortly before the springtime omnibus, which is rumored to cost another $500 billion.