A tailspin of spending

Obama's economic approach isn't improving America's fiscal fitness

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More than a year in, and many thousands of jobs lost, "Obamanomics" is failing to stimulate either the economy or the support of European allies.

As a result, experts fear the weak and mostly jobless recovery may give way to a double-dip recession.

The president's approach was largely to put the country deeper into hock to the Chinese in order to shore up government jobs -- which he did, temporarily. But even there, the pain is now coming in waves: In South Carolina alone, thousands of teachers and other state workers are expected to lose their jobs in the coming months.

The strategy of shoring up the public sector might have been rescued from itself had Washington also pursued broad policies to reinvigorate the private sector with tax cuts and decreases in the regulation and litigation that hold back job growth and entrepreneurship. Sadly, that was not to be the case.

Mr. Obama's government-centric, spend-spend-spend approach has failed utterly and completely.

However the Obama administration wants to pass the buck to the prior administration -- no other White House has ever done more of it -- the plain facts are that this president's approach to the national economy isn't helping, and may be hurting.

Starkly, a year after being the belle of the ball, Obama was wholly rebuffed by other world leaders at the recent G8 and G20 meetings in Canada -- where he tried to sell the debt-strapped nations of Europe on yet more spending, which he's trying to sell us on as well.

As cable financial network CNBC said of the Federal Reserve's take on the economy, "employment is showing only gradual improvement, the housing market is languishing and consumer spending is increasing only modestly."

One analyst told CNBC, "We think we'll be fortunate if the double-dip is the worst that lies ahead."

Fortunate to only be in a second recession?

Yes. That means what you think it means.

"We would eagerly like to see divergence from the parallels to 1930," the analyst told CNBC. "So far there are no signs of divergence."

Recently, Reuters reported, "Private payrolls rose less than expected in June and overall employment fell for the first time this year as thousands of temporary census jobs ended, showing the economic recovery is failing to gain traction."

In addition, a report released by the respected and nonpartisan Pew Research Center says unemployment figures "don't fully convey the scope of the employment crisis that has unfolded during the recession." Writing of the 13 recessions since the Great Depression, Pew says, "none has presented a more punishing combination of length, breadth and depth than this one."

Since the "Great Recession" began in 2008, Pew says, 55 percent of adult workers have experienced "a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers."

In another report, Pew says 29 percent of Americans believe Obama's policies have worsened the economy, while only 23 say they've helped. The percentage saying they've hurt the economy has nearly doubled in the past year.

Oddly enough, the G20 summit in Canada recently saw leaders of the European Union schooling Mr. Obama on basic economics and the need to reduce debt; ultimately, the richest nations pledged to cut their deficits in half by 2013.

We do agree with Mr. Obama's caution to his European colleagues: They could make things worse by cutting government spending too abruptly and deeply, while also raising taxes. The spending must be eased up on delicately -- and this is no time for higher taxes.

But the president's lack of commitment to reducing spending is much more worrisome.

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charliemanson
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charliemanson 07/07/10 - 11:46 pm
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Russian economist predicts

Russian economist predicts “Great Depression 2″ in the United States

Posted November 9, 2008

KP: Mikhail Leonidovich, how did you end up predicting the current financial crisis?

Khazin: In the spring of 1997, the Kremlin established the Presidential Economic Department. I was made the deputy head of the unit. Our first task was to prepare a report for [former President Boris] Yeltsin about the economic situation. We realized an economic crisis was pending in Russia and would take place in the late summer or early fall of 1998 if the country’’s economic policies weren’t changed.

KP: What view did the higher echelons take of your report?

Khazin: They didn’t really take any view at all. No one read the text except for the deputy head of the administration and Yeltsin himself. In the summer of 1998, we were fired from the presidential administration for trying to stop a business project titled, “State Treasury Bills— Exchange Rate Corridor.” This was the biggest financial scheme of the post-Soviet era. Just as we had predicted, an economic crisis gave way that August. Together with my colleagues, I continued researching the reasons behind the crisis.

After becoming seriously consumed in our studies of the U.S. financial system, we found an unprecedented parallel. Just as our T-bill market had sucked all the juices out of the Russian economy, the U.S. financial market was sucking the resources out of the entire planet. We realized a similar fate awaited the U.S. financial system. Our article was published in the summer of 2000 in the “Ekspert” magazine, titled, “Is the U.S. Digging for an Apocalypse.” We concluded that it was just as impossible to avoid an economic crisis in the U.S. as the financial collapse in Russia.

Playing the idiot

KP: The U.S. obviously didn’t listen to the song written by [the renowned Russian rock group] LUBE during perestroika, “Don’t Play the Fool, America!” Seriously, though, what’s the real reason for the economic collapse? Let’s try to do this without any heavy duty financial terms…

Khazin: I’ll try! The economic model that led to the collapse was the result of a crisis in the 1970s. This was a terrible financial crisis that was the result of surplus capital. Even the 19th-Century classics in economics literature concluded that capital grows faster than labor provides compensation. As a result, there is a lack of demand. In traditional capitalism, this problem is solved on account of crises in excess production. And in an imperialistic system, the problem is solved on account of capital outflow. But by the 1970s, these solutions had run their course. However, the internatinoal situation demanded the U.S. either make a great scientific and technological leap forward or lose the Cold War to the USSR. The administration of [President Jimmy] Carter and the head of the Financial Reserve System Paul Walker developed a very tricky concept. For the first time in the history of capitalism, capitalists began helping others, issuing new currency in an effort to stimulate aggregate demand .

KP: They decided to switch on the printing press?

Khazin: Exactly. In the early 1980s, they started to stimulate demand through state support. For example, they launched the “Star Wars” program. As of 1983, they placed an emphasis on the household economies.

KP: You mean, they relied on the average citizens?

Khazin: Yes. For an entire quarter century, households received funds as a result of issuing new currency in larger and larger quantities.

KP: In other words, credit?

Khazin: Yes. The U.S. was able to make the next step in technological progress as a result of this excess demand. They accomplished the collapse of the USSR and numerous other significant fears. But… The boom took place thanks to resources that were supposed to provide for future growth. The country ate its own resources two generations ahead of time. The U.S. built up tremendous debt. This is clearly seen if we compare the growth of debt in U.S. households with the entire U.S. debt and GDP. The economy is growing at an annual rate of 2-3, or at a maximum 4 percent. But debt is increasing at a rate of 8-10 percent.GovMint.com

KP: Well, let the debt keep growing… The U.S. lived fine up until now without a problem… Better than we did!

Khazin: Yes, the U.S. did create a very high standard of living by stimulating consumer demand. Generations lived without having to experience poverty. But it’s impossible to live forever in debt. Household debt has now surpassed the national economy — more than $14 trillion. Now it’s time to pay up. Of course, Wall Street tried to postpone this collapse. I won’t go into detail about derivatives and other such financial assets, but this was just a gasp for air before an inevitable death.

Another problem in the U.S. is that powerful industries were built around this growing demand. Whatever decision Wall Street takes right now, the demand is going to fall. What will happen to these industries? In 2000, we estimated that 25 percent of the U.S. economy would disappear. Today, we think the number is closest to one-third — if not more.

KP: That’s a lot!

Khazin: That’s an incredible amount! But what exactly does this mean — the destruction of one-fourth of the U.S. economy? It means an uncontrollable increase in unemployment, a horrible depression, a sharp increase in the effect of social services on the budget… Now, the U.S. is jumping all over the place doing everything its can to rescue this fraction of the economy. The government is stimulating banks and manufacturing… But regardless, in 2-3 years, the U.S. will face a crisis similar to the Great Depression.

Source: http://www.chuckypita.com/russian-economist-predicts-great-depression-2-...

joehill
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joehill 07/07/10 - 11:48 pm
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wow, dodo. you are certainly

wow, dodo. you are certainly an optimist... but seriously, folks, the crash is inevitable. it's the price we are forced to pay for the booming years. no way around that. would have happened no matter who is president of the us. and as the saying goes, you can't squeeze blood from stone. so the rich are bound to lose some money in this down cycle. get over it.

dodo1234
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dodo1234 07/08/10 - 12:16 am
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ALLAHU AKBAR

ALLAHU AKBAR

carcraft
37366
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carcraft 07/08/10 - 05:57 am
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Joe- We were in a correction.

Joe- We were in a correction. The housing market was over heated because of government spending that allow unqualified people to buy houses. If it had been left alone it would have ended with some pain for banks, other lenders, unqualified barrowers and speculators. We now have it affecting everybody. About every six to ten years we go throught a correction. Last time when Bush took office it was the tech bubble. Obama , by spending 800 billion and tarp (a republican boondoggle Obama voted for) has made it worse! Interesting also that Fannie Mae and Freddie Mac are not part of the economic reform package yet are going to cost us hundreds of billions of dollars in years to come...

johnston.cliff
2
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johnston.cliff 07/08/10 - 07:34 am
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The over spending of the

The over spending of the federal government and the redistribution of wealth programs by the liberal left and politicians who forgot why they were in Washington, has given us this needless recession. MORE spending and MORE redistribution of wealth programs and more taxing of the producers and employers of this nation will not help.

The reason basic economics is no longer taught in school is so this silly mistake can be repeated. This is EXACTLY the system FDR used to send America spiraling into a second depression in 1938. The redacted history taught in the government schools leaves out this fact. As a result, "those who don't learn from history are doomed to repeat the mistakes of the past".

While government doesn't create jobs (except more government jobs) it can keep money from those who produce and create jobs. That's what's happening now with the buffoonery taking place in D.C.
It's obvious to all who choose to see.
Seizing control of manufacturing, financial investment, and health care while threatening huge tax increases is no way to "stimulate" the economy. Borrowing money and giving it to political cronies while taxing America to pay back the loans won't stimulate the economy...even if the "payback" is delayed.
Only by reducing government spending and reducing taxation can the producers feel willing to invest in the country. Government control of industry is no friend of capitalism.

Ga Values
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Ga Values 07/08/10 - 08:14 am
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Several weeks ago a reporter

Several weeks ago a reporter asked our Senior RINO Senator Saxby Chambliss if he would give up his earmarks to cut spending. Saxby's reply was no because they were not the cause of over spending, for once I agree with Sxaby, He & and Johnny Bailout Isakson are the problem.

justus4
130
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justus4 07/08/10 - 06:49 am
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Didn't this writing just
Unpublished

Didn't this writing just appear somewhere? To keep yapping about spending is useless and November will prove it. Here is why it don't matter and only a scare tactic used to undermine the CINC: The two wars, started under GWB costs 2.3 billion a week! That amount do NOT account for the injured service members who will require medical services for the REST of their lives. (50yrs) The VA benefits that will be required to pay that vets have to fight & fight for in Congress, and the families ruined, and the limbs lost, and the sight lost by a un-winnable exercise in supreme stupidity. If we got that much money to spend on death, then don't mention the money spent to keep teachers & firemen working. Your argument falls on death ears because the money wasted on those wars is government waste, so who started us down this foolish road of waste and war? GWB put us on such a bad road it will take ten yrs to recover. Good thing this president will be spend his eight getting us out of Iraq & Afghanistan, thus SAVING possibly trillions.

Rhetor
1193
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Rhetor 07/08/10 - 06:55 am
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1. Reason #1 for the deficit

1. Reason #1 for the deficit is not spending, but reduced tax revenue because of the recession. Cut spending to match tax revenues and you repeat Herbert Hoover's formula for destroying the world's economy. 2. Reason #2 for the deficit is the war(s). The experts who fear a double-dip recession are mostly citing the deficit hawks as the reason--if the government tries to rebalance the budget during an economic slowdown, then, yes, we'll have a double-dip recession. Finally, the ACES relies, once again, too much on media pundits and not enough on actual research. You have reporters on staff, don't you? Put them to work reading (yes, reading, not listening to TV) and get some actual information, please.

Yepitsme
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Yepitsme 07/08/10 - 08:10 am
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justus4 REPEATED articles

justus4 REPEATED articles like these that the chronicle editors borrow from other news agencies (NOTE: They never toot their own horn), only excite those who are in agreement with them. What's funny is these three editors work is so AMATEURISH they can only get honorable mention in STATE Newspaper awards. I say to them, keep up the good work, honorable mention is good I suppose LOL.

55 F-100
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55 F-100 07/08/10 - 07:07 am
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Prezbhojangles will only have

Prezbhojangles will only have one term during which he will try to destroy this nation. The traitorous obamazombies will be voted out in November 2010, and the failed experiment in diversity community organizer will be voted out in 2012 and he can take his hideous wife and her TV ads with him.

Rhetor
1193
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Rhetor 07/08/10 - 07:15 am
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Wow, F-100, this is not an

Wow, F-100, this is not an experiment in diversity, as our country's racists seem to think. What would even lead you to make such a comment? Obama is not an experiment. African-Americans are not an experiment. Shame on you. Shame on those who agree with you. I do think, however, that it is good that your foul opinions came out into the open for everybody to see.

Techfan
6464
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Techfan 07/08/10 - 07:22 am
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cliff: Evidently, they taught

cliff: Evidently, they taught neither economics or history in your school. FDR didn't even take office until March 4, 1933.

johnston.cliff
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johnston.cliff 07/08/10 - 07:26 am
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I agree with Rhetor, obama is

I agree with Rhetor, obama is not an experiment in diversity, he's a FAILED experiment in diversity. Shame on all that allowed this to take place.

chascush
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chascush 07/08/10 - 07:28 am
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Rhetor, It is great that a

Rhetor, It is great that a black was elect president we just elected the wrong black man, a community organizer with no experience running anything. I feel sorry for Obama he had a very trouble childhood. His father deserted him then his mother took him to Indonesia where he was trained as a Muslim. His mother left him with his grandparents when he was about 10. His grandfather picked Frank Davis the communist to be Obama’s mentor. It is no wonder he has mental problems

johnston.cliff
2
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johnston.cliff 07/08/10 - 07:29 am
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Rhetor, your 6:55 is a very

Rhetor, your 6:55 is a very good parroting of the government (according to obama) spiel. It has just enough "fact" to give the impression you may be somewhat in touch with reality. Still, the obamanomics rehash from the '30s is just as inefficient as it was the last time it failed.
Hey, isn't that the same era his political philosophy failed? Obama may have just been born 80 years too late.

CarlosC
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CarlosC 07/08/10 - 07:32 am
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TOYOTA®

TOYOTA®

johnston.cliff
2
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johnston.cliff 07/08/10 - 07:33 am
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You're right Techfan, my post

You're right Techfan, my post should have read 1938. I've corrected my mistake. Thank you.

55 F-100
1
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55 F-100 07/08/10 - 07:34 am
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The voters who voted for

The voters who voted for Prezbhojangles because of the color of his skin did so because they wanted a black man as president....period. And since all presidents prior to him were white, then this presidency can only be viewed as an experiment in diversity, and thus far, with all of his failed, foolish programs and ideas, it can only be termed as a failed experiment in diversity. There is no shame attached to speaking the truth.

Rhetor
1193
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Rhetor 07/08/10 - 07:50 am
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F-100, oppose the president's

F-100, oppose the president's ideas, no problem. Attack him on the basis of race, and you shame yourself. I imagine that many people voted for him on the basis of race, but suspect that a great many more people oppose him on the basis of race. The truth is that he was the best candidate for the job, and is doing remarkably well in the face of such obvious, undisguised, and racially-motivated hatred.

Rhetor
1193
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Rhetor 07/08/10 - 07:49 am
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Back to the topic. Yes, the

Back to the topic. Yes, the deficit is a major long-term concern. Many economists do, however, take the view that the best way to balance the budget in the long run is to stimulate the economy and thus raise tax revenues. The deficit is high mostly because (1) unemployed people don't pay income taxes and (2) Obama cut taxes to stimulate the economy, which conservatives have advocated ever since the Reagan years (if not before). Before Obama, you people were all supply-siders. Why have you suddenly changed your minds? Conservatives shouldn't change their minds willy-nilly like that.

Rhetor
1193
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Rhetor 07/08/10 - 07:53 am
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How soon people forget! At

How soon people forget! At the end of 2008, the economy was falling apart at the seams. Bush, to his credit, ignored the ignorant deficit hawks in his own party and pushed TARP through Congress. Obama continued with stimulus policies. We've pulled back from the brink, putting the economy into a real (but painfully slow) recovery. Be grateful.

FaceTheMusic
0
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FaceTheMusic 07/08/10 - 08:00 am
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The two main causes of the

The two main causes of the deficit are the recession and the two wars, and we all remember when they started and who started them.

Techfan
6464
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Techfan 07/08/10 - 08:56 am
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cliff: Did you perchance mean

cliff: Did you perchance mean 1937? That's when the dip started, after cuts to WPA and PWA.

dichotomy
48365
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dichotomy 07/08/10 - 09:46 am
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Yes, I remember who started

Yes, I remember who started the first war and they were located in, and in control, of Afghanistan and they attacked and killed 3000 Americans. I'll give you a toss up on Iraq, even though the entire world, the majority of Democrats, and the U.N. aggreed that Saddam had to be taken out. So don't give me this crap that Bush started two wars. He may or may not have been correct about Iraq but the majority of the people, the Democrat politicians, and the world agreed with him that a murderous dictator who possibly had WMD, definitely was mass murdering Kurds, was defying U.N. mandates, and was a threat to other countries in the middle east and needed to be removed. Bush's war? Not hardly. And very few people disagreed with them when they began. What people NOW disagree with is the cost of the post-war operations, occupation, and reconstruction. Both of the actual "wars" were over in a few weeks and those operations were probably justified. Maybe the "doctrine" of "you break it you own it" is no longer practical. Maybe we should have just killed the bad guys, leveled the infrastructure, pointed our finger in their face and said "we are going home now but if you screw with us again we will be back". $Trillions saved, 95% less American casualties, and probably the same long term results. Nowadays it is not the "wars" that cost money and lives, it's the post-war occupation and reconstruction where all the lives are lost and the money is spent. But however you slice it, these are not Bush's wars. They are our wars, the U.N.'s wars, and the current administration knows it and that is why we are still there and will be there for years. If they were truely Bush's wars Obama would have pulled out a year ago to pander to the left wingers.

confederate american
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confederate american 07/08/10 - 09:58 am
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I would suggest that you read

I would suggest that you read the PATRIOT by john wesley rawles

southernguy08
580
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southernguy08 07/08/10 - 11:10 am
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FACE, these wars began when
Unpublished

FACE, these wars began when Islamic terrorists slaughtered 3000 innocent Americans on 9/11. As for the wars, Obama campaigned on ending them, yet he's increased troops in Afghanistan. Huh? As for the spending in Washington, congress is acting like kids in the candy store with their dad's credit card. Spend now...somebody else pays later. Anybody hear the subject of a balanced budget amendment even being brought up for discussion in Washington these days? No? Gee, I guess that's not "change we can believe in." Washington idiots! Stop this madness by voting them out in November, folks. Otherwise, this will continue. And JUSTUS, you are the epitome of optimism if you think Obama will be in the WH for 8 years. Look at the polls, man!

baronvonreich
1
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baronvonreich 07/08/10 - 01:55 pm
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Wells Fargo just laid off

Wells Fargo just laid off 3800 people today. So much for that stimulus bill.

If the "wars Bush started" as some here call them is a main problem with the deficit/economy, then why hasn't Obama and the Democratic controlled Congress stopped them? What is stopping these Democrats and President who say they oppose the war, yet voted for it and its funding time and time again, from ending the war?

Yepitsme
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Yepitsme 07/08/10 - 02:19 pm
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If Obama runs again for

If Obama runs again for President, He has my VOTE!!!! NUFF SAID.

southernguy08
580
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southernguy08 07/08/10 - 03:30 pm
0
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YEP, I'm sure Obama will
Unpublished

YEP, I'm sure Obama will appreciate that since polls show he won't get much repeat business when he runs for re-election. NUFF SAID.

confederate american
0
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confederate american 07/08/10 - 03:33 pm
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yepitsme and you would also

yepitsme and you would also vote for al green,LMAO.OH YEA,he wants to make a action figure of himself maybe he can get clyburn to help him,LMAO,two of the biggest idiots on the planet

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