Harsh verdict on Obama

The stock market tends to react to news of the day and to conditions as investors see them. The sharp decline in recent weeks cannot be blamed entirely on the leftover effects of the Bush administration and the policies that supposedly got the nation into this mess. That's old news. This decline, which has taken the Dow to lows not seen in more than a decade, is a reaction to President Obama and his stimulus package and budget proposal.

The market is indeed dealing with heavy issues that predate this administration. The banking system still is laden with billions of dollars of bad assets, stemming mainly from bad mortgages. A credit freeze and a lack of confidence has slowed the movement of commerce, resulting in layoffs, business contractions and, in some cases, the closure of some long-running establishments.

But what the market needs now are incentives for entrepreneurs and greater freedom from burdensome taxes. Instead, Obama's plan includes massive tax hikes, a rollback in deductions wealthy people can take for voluntarily giving their money to charities and an anti-global warming plan that would impose new energy costs on everyone. Even if the president's promise not to renew the Bush tax cuts won't take effect for two years, telegraphing that decision now has an immediate effect on the economy. And besides, many experts believe the economy will not have recovered sufficiently by 2011 to absorb such a hike.

The president is predicting a budget deficit this year of $1.7 trillion. That represents 12.3 percent of the nation's gross domestic product, the highest level since the end of World War II.

And it won't get much better in coming years. Much of this is due to the stimulus money in both Obama's and Bush's administrations, but such a large debt burden can't help but be a drag on the economy.

The Obama stimulus package had no discernable goal other than to throw as much money at social service, public works and other programs as possible.

The history of that type of domestic spending is not encouraging. Inflation looms as a real long-term possibility. And the history of tax hikes during difficult times is even less encouraging. In the Hoover-Roosevelt years it turned an economic downturn into a 12-year Depression.

Obama said this week people shouldn't worry about the daily stock market report, which he said is not a long-term indicator. "You know, it bobs up and down," he said.

Trouble is, we haven't seen it bob up since Obama took office. That is because the market sees what is happening.