There was a line drawn in the sand yesterday during Barack Obama’s inaugural address. First, let me say that I thought it was a terrific speech. It was uplifting and hopeful, and I am certain that Americans feel better about themselves this morning. The problem that I have is ideological because I think President Obama said something in his address that economically was dead wrong. He said, “the question that we ask today is not whether our government is too big or too small, but whether it works.” Great soundbite, but it begs the question. Contrast that with Reagan’s inaugural address in which he stated that big government is not the answer to our problems, but rather big government is the problem.

Who is right?

I recognize full well that there is an overwhelming complement of people who believe that a government spending program will stem the tide of recession. It will not. It is a band-aid on a hemorrhage (get used to that metaphor). What cures recession is growth; permanent, sustainable growth. The question now has to be asked, How do we get that growth? This is where Obama seems to get it, as he brilliantly put forth his case in his inaugural address.

He said, “For as much as government can do, and must do, it is ultimately the faith and determination of the American people upon which this nation relies. But those values upon which our success depends—honesty and hard work, courage and fair play, tolerance and curiosity, loyalty and patriotism—these things are old. These things are true. They have been the quiet force of progress throughout our history.”

Amen, brother. Even he thinks that government, by itself, is not the answer. So, will the government injection of one trillion dollars make us courageous, give us a sense of fair play, make us tolerant or curious, loyal or patriotic? Better yet, will it get us a job or allow us to stay in a home we cannot afford? What will be the effect of the safety net? Will it assist or will it enable?

For the solution to recession, we must go back to the cyclicality of the American free enterprise system. There is no other direction in which to turn. In this morning’s Wall Street Journal, Alberto Alesina and Luigi Zingales suggested that what we needed to do as a nation was stimulate private risk taking. Privately, the Obama economic advisors are worried about Keynesianism (they should be), but they argue that they need to do something different because this recession is different. Folks, there you have the inevitable thought that has doomed American enterprise since day one…

“This time, it’s different.”

Alesina and Zingales are right, but even their proposed solution will find no traction unless government gets out of the way. That means NO tax increases. So, riddle me this, Batman, how do you balance a trillion dollar deficit with no new revenues? This is a doomed economic backdrop. I want it to work, but innovation is not fueled by tax hikes. It is fueled by tax cuts. Curiosity is not fueled by social spending programs. It is fueled by responsible spending.

As succinctly as I can say it, there is nothing different about a recession; its cause or its cure. It is economics 101. We go from bust to boom and back again. The cycle is fueled by the highly combustible emotion of fear, hope and greed. And, no matter how hard you try to avoid it, it is the nature of a cycle to repeat itself.

There is nothing magic about it. There is nothing mysterious about it. There is nothing unusual about it. We can see it; each of us, in our own lives. When things are going well; our jobs are stable, we get a few bucks ahead, we feel better about risk taking.

Do you see yourself?

When the reverse is true, we pull in the horns. So, where are we today, and what is going to cure your fear? I don’t think a trillion dollar deficit does it.

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