One word: word.
A few weeks after President Obama’s victory in the 2008 election, adviser Rahm Emanuel quipped that “[y]ou never want a serious crisis to go to waste . . . [because it] provides the opportunity for us to do things that you could not do before.” Emanuel was correct: The situation in which the new Administration found itself constituted an unusual political dynamic that, properly used, would have allowed the Obama Administration both to stimulate the economy and make it more productive over the long haul.
The Administration should have endorsed a stimuluspackage based on a repeal of the corporate income tax and reductions in employment taxes. This policy would have accomplished its stated goals, and the budgetary implications would have been less negative than those of the package ultimately adopted because this alternative plan would have enhanced rather than detracted from economic efficiency. This approach would also have been difficult for Republicans to oppose.
Yet the Administration did not take this approach, presumably because its true goals were not just economic stimulus. Instead, the Administration wanted to reward its constituencies (unions, environmentalists, public education) and increase the size and scope of government. This tactic is consistent with the Administration’s policies in general. Across the board, it has taken a big government, redistributionist approach, whether regarding housing, unions, health, the auto industry, trade, anti? trust, or financial regulation. The Administration’s view appears to be that government is better than individuals at deciding how taxpayers get to spend their money and that government should engineer large transfers from richer to poorer.
Whether the Administration’s stimulus package will be successful is still to be determined. If the extra spending ends up being productive, then the impact of the stimulus might be positive on net. My own prediction, however, is that the programs adopted will generate large distortions and substantial waste, with minor stimulus impact. This is a pity because much better alternatives were available.
Let me quarrel with my better by insisting that if the economy turned around tomorrow (which, lamentably, it won’t), it couldn’t possibly be due to Obama’s stimulus boondoggle—which has been in place for a year and a half, with no discernible effect. Even Obama would agree: If everything up to now has been Bush’s fault, how would Obama’s policies magically take hold overnight?
No, this is the result of the stimulus bridge we were sold:
On the eve of the midterm elections, a third-quarter GDP report showing a meager 2 percent growth rate is the final nail in the Obama Democrats’ political coffin.
The economic nails slowly have been hammered into that coffin all summer and fall. A spate of subpar economic statistics has shown the failure of the fiscal-stimulus spending program. And myriad tax and regulatory threats produced by new government policies have created a massive uncertainty overhang and a dismal jobs outlook. American businesses have gone on an investment-capital and hiring strike.
For a White House that bet the ranch on a massive government pump-priming plan, it has all turned out to be a complete failure. The scheduled economic recovery has simply not occurred.
It should have been recovery summer, according to the president and his followers. But it is now officially a recovery slump. The entire command-and-control economic philosophy of the Obama Democrats has proven to be a big bust. And they’ll pay a very big price for this.
In fact, the last two GDP reports have averaged less than 2 percent growth, something that qualifies as a growth recession, not a recovery.
Even worse, the GDP deflator – the broadest inflation measure – came in at 2.2 percent in the third quarter, following a 2 percent reading in the second quarter. That means inflation is rising faster than real output. Stagflation.
Aggie has been calling it stagflation for months now. The rest of us are just figuring it out.
When Rush Limbaugh notoriously announced “I hope he fails!” it was taken by some, disingenuously, to mean that he hoped the country failed. Rather it was obvious to anyone with a brain stem that Rush meant he hoped Obama failed in his ambitions to remake the country in a socialist image. But Rush might also have meant that he hoped that, if we had to have a President Obama, he hoped he failed and failed spectacularly in his Stalinist-Leninist efforts. Because that’s happened, too.
Speaking of Rush and failed stimulus efforts, it’s been at least a couple of weeks since I posted this:
My proposal is a genuine compromise.
Fifty-three percent of American voters voted for Barack Obama; 46% voted for John McCain, and 1% voted for wackos. Give that 1% to President Obama. Let’s say the vote was 54% to 46%. As a way to bring the country together and at the same time determine the most effective way to deal with recessions, under the Obama-Limbaugh Stimulus Plan of 2009: 54% of the $900 billion — $486 billion — will be spent on infrastructure and pork as defined by Mr. Obama and the Democrats; 46% — $414 billion — will be directed toward tax cuts, as determined by me.
Then we compare. We see which stimulus actually works. This is bipartisanship!
Look at your pay stubs, liberals, and admit you don’t feel a pang that Obama didn’t take Rush up on his offer. I bet you even secretly wish (in those dark places of your heart you don’t admit even to your psychiatrist, your publicist, whatever) that Rush were president.