President Obama's First Press Conference - "The Agony and the Ecstasy"

It certainly was refreshing to see President Obama deliver his first official press conference. This was a commanding performance compared to President Bush's past press conferences. One of President Bush's weaknesses was his inability to effectively communicate without a prepared script. This became painfully evident at his press conferences which, unfortunately, is not a small problem. He, therefore, gave very few press conferences and relinquished an important venue to affirm to the voters that he had a firm grasp on pressing issues of the day.

President Obama deserves high marks for being articulate and demonstrating and in-depth knowledge of the topics that were discussed. There is no question that leadership requires an effective ability to communicate ideas and be persuasive. While this is important, what is equally if not more important, is the content of these ideas and their effectiveness.

Unfortunately, the President presented the American public with some poor choices. This is illustrated when he forcefully stated that, while he is open to good ideas from the Republicans, he will not listen to the same failed policies that got us into this crisis in the first place. We can infer from this important remark, based on what he has said in the past, that President Bush's tax cuts were a major contributor to these failed policies.

We all know the cliche that in order to solve a problem you have to identify the cause. Unfortunately, President Obama is putting himself in a box if he believes that President Bush's tax cuts were a major cause of the current crisis. According to Milton Friedman, permanent tax cuts are a more effective way to increase consumer spending than one-time payouts. This is predicated on his theory of permanency, which states that you can more favorably influence behavior when change is not temporary. In the past, when we reduced capital gains taxes and lowered the marginal tax rates, we had seen a commensurate improvement in the economy and the stock market. This occurred under the Kennedy administration, the Reagan administration, and the Bush administration after 2003 when his more permanent tax cuts became effective.

It was excessive government spending, in conjunction with tax cuts, and a vigorous monetary policy under Greenspan that put too much liquidity in the system. Furthermore, interest rates were kept too low for too long and provided the fuel for the housing fire that burned out of control. In addition, in his book "The Age of Turbulence" Greenspan suggests a more hands-off approach to capitalism. Thus, he provided little oversight or regulation of our financial system as leverage, risk, and complex financial derivatives dramatically increased.