U.S. News columnist James Pethokoukis takes a look at Obama’s economic recovery plan and can see the same failed strategies tried by the US in the 30’s and Japan in the 90’s:
“The road ahead will be long. Our climb will be steep,” Obama said on election night. And there’s no doubt that many other countries plagued by imploded asset bubbles and resulting banking crises have suffered a long stretch of bad times. In Sweden, between 1990 and 1993, the economy shrank by 6 percent. Japan experienced a “lost decade” in the 1990s. Then, there was the 1990-91 recession here in America. Even after the economy started expanding again, the unemployment rate kept rising until it hit 7.8 percent in June of 1992 vs. a low of 5.2 percent in June 1990. So, certainly America is at risk for an extended case of the blues.
And that’s what is so frustratingly weird about Obamanomics and the plan for hundreds of billions, if not trillions, of dollars in “stimulus” spending. If the goal is to turn around the economy as quickly as possible, why would we turn to the same economic playbook that America ran in the 1930s and Japan in the 1990s? In both cases, massive government spending failed to bring back prosperity. And it’s unlikely to work this time, either. Economists Susan Woodward of UCLA and Robert Hall of MIT are dubious. In their cowritten blog, the duo opined that “timing may be a problem . . . Complicated projects take time to ramp up to high spending and employment levels. . . . All of these proposals for stimulating state and local spending suffer from a common problem—they will end up generating employment for highly specialized businesses and workers, rather than stimulating economic activity more broadly. A large-scale infrastructure program will drive up the profits of the limited number of firms.” That conclusion dovetails nicely with a 2005 study, “What Are the Effects of Fiscal Policy Shocks?” which looks at U.S. economy policy since 1955 and concludes that “a deficit-spending shock weakly stimulates the economy.”
What would work?
…a plan that creates confidence by enhancing the long-term rewards for working, saving, and investing. Take the 1980 Reagan tax cuts, for instance. As Arthur Laffer, Stephen Moore, and Peter Tanous point out in their new book, The End of Prosperity, the bulk of the Reagan reductions didn’t kick in until 1983, and they were somewhat offset by the 1982 corporate tax increases. But when the full weight of the tax cuts was felt, the economy took off like a rocket, rising 4.5 percent in 1983 and 7.2 percent in 1984. Imagine if the capital-gains tax were slashed immediately. The stock market would soar, automatically increasing the net worth of tens of millions of Americans.
But a plan such as that is blasphemy to a Socialist. And really…why would they want to fix the economy when even the new Chief of Staff, Rahm Emanuel, said just a month ago:
“You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before.”
Going to be a long four years.
See author page
You need to read Saul Alinsky. It is not about creating prosperity.
It is about creating a population utterly hopeless, disparate and disaffected. That is the objective in order to accomplish radical revolution. This is what Obama was reared on. Unless he can make victims of us all, he will never have real power and that is what Alinsky is about, how to get power; how to get people to forfeit their rights, liberties, self respect, responsibility and determinism, you know everything that makes America great.
People will only accept his brand of change if things cannot get any worse. So it is necessary to bottom out the entire society. The fact that if allowed to run its full course, there will be nothing left is thinking too far ahead, these folks don’t think like that. They only know that now there are not enough unhappy people, so he is going to make them as fast as possible…
…if we let him.
Best regards,
Gail S
Obama will use the Keynsian Economic doctrine to destabilize this nation so he can turn it into a communist country after the whole economy will be completly destroyed . The “Big Brother” government will then take America from within. America will no longer be. Bingo! Obama will go thru History and be even more famous than Hitler. His dream will be achieved.
I will watch and learn about the plan as it takes shape. As it is now, the Republican administration has spent hundreds of billions and allowed the Fed to add hundreds of billions to its balance sheets. Much of this money has not been properly accounted and needs to be!
Simplistic comparisons to the Great Depression and Japan in the 1990’s will not advance an understanding of the multitude of problems facing our economy today. Such as:
Huge national debt
Huge trade deficit
Over leveraged banking sector
Historic collapse in housing values
Nearly destroyed manufacturing sector
Personal overspending and debt
Low national savings rate
Woefully regulated financial instruments
and much more.
Right now the last thing I want our leaders to be doing is playing “Russian Roulette” by making precipitous, reckless or dogmatic pronouncements.
Forget about “clinging” to guns and religion. Those are good things to cling to. Clinging to an Alinksy-type myth that Obama is out to create a radical socialist revolution is not only wrong, it’s childishly naive.
The danger to Republicans is not that Obama is going to move too far to the Left; it’s that he’s going to move too far to the Right and effectively destroy the Republican Party as a national electoral threat for a generation. If he goes to the Left, he’ll not only not survive, but he’ll go down in history as the black man who screwed up the electoral and other leadership prospect for the blacks to follow. He understands the historical importance of not being the one to screw it up. He knows if he plays his cards right that he has the chance to achieve true historical greatness and to get his picture on the currency of future generations. This is what he’s after, not some sort of idealized socialist revolution.
But if you Republicans want to continue believing that the threat posed by Obama is that he’s going to take away our guns, teach kindergartners how to have sex, padlock our churches, nationalize our industry, and give Osama Bin Laden the Medal of Freedom and the keys to the City — well, just don’t say that I didn’t try to warn you.
– Larry Weisenthal/Huntington Beach, CA
Curt—You nailed it in a thread a few weeks ago. The only thing that got the U.S. out of the Great Depression was World War II.
There is not going to be anything like that to get us out now. It’s going to take a lonnggggggg time, and even then things will not go back to the way they were.
100 years from now, it will be called the Great Correction
Larry W.
For once you are right. Obama wants to go in History, but not as the greatest President of the United States of America, but as the ONE who destroyed America. His ambition is greater than America, his ambition is worldwide. Imagine, the guy who destroyed America, he will be the most famous politician of all times. And if you don’t beleive me – well, just don’t say that I didn’t try to warn you.
Craig, Larry can only see in obama what he wants to. He has drank the obama kool-aid big time. He will learn the truth in time. Whether or not he can accept it is something else.
Obama wants to spend our way out of the slump with massive socialist spending programs. Well, that is likely to prolong it or make it worse. If obama carries out his other socialist programs he will have achieved all that larry refuses to admit is his goal.
Some blogs say Obama is a radical Liberal, even before the election, some affter the election because of his Economic Recovery Plan, which he hasn’t released yet. Others say he’s right of center because of his appointments. I am just so confused …. don’t know which way to go with this.
Haggard
Larry is right. Tony Blair did exactly that when he moved the formerly socialist British Labour party into the political center ground, marginalizing the British Conservatives and keeping them out of power for a generation.
Obama has not moved right. Only those who hope he’ll be our savior seem to think so.
James Pethokoukis is a partisan clown – go back and read his blog in the days leading up to the election – if anyone got it more wrong, i’d like to know who…
Obama has not moved right. Only those who hope he’ll be our savior seem to think so.
No? What evidence do you have that he even has much of an ideology? I know of course that his congressional voting record is quite liberal – but is that Obama’s beliefs, or is that just him not rocking the boat in a liberal Democratic district?
His appointments have definitely been far enough to the center to piss off his buddies on the left. You might also notice that while he had at various points proposed some fairly radical things (like national youth service or a huge international aid program), he backed off from those pretty fast.
Now maybe you think this is all part of some sinister master plan to sucker people into complacency, but a simpler explanation is that his first commitment has always been to his own success – kind of like most politicians.
None of this means I think he will handle our problems well; he has the bias for action that leads to all sorts of economic problems and government overspending.
War, and the non-partisans who agree with him?
Bbart, Hillary, Rahm, Susan Rice, Bill Richardson, Cecilia Muñoz, are moderates? No, it seems people are saying they are centrists because they aren’t crazy kucinich type leftists.
Well, he made it a point to associate with radicals, he voted faaar left, and he is proposing we sppend our way out of a recession with socialist programs that rival what FDR did. Seems like good indicators to me.
OMG! Obama wants to appoint Al Gore for Energy in his cabinet. God help America! The next gift from Obama: Kyoto. Merry Chrismas!
Craig, link?
http://www.huffingtonpost.com/2008/12/10/steven-chu-energy-secreta_n_150006.html
Hard Right,
I have no link for that. I heard it on radio (Canadian). But I look thru the Internet and certainly there is a lot of rumors about it. We all know that Obama promised a Cabinet position to Gore.
Here is one of the rumors:
Is Gore Energized to Join the Obama Cabinet?
http://www.huffingtonpost.com/jacob-heilbrunn/is-gore-energized-to-join_b_149473.html
Don’t scare me like that Craig. I won’t panic until it’s time. 🙂
Hard Right… lol
Don’t worry, rumors are circulating. Now MSNBC reports that Chu will be named Energy Secretary, but that it will not be announced this week.
Looked up Chu…he’s not much better. He’s an alternative energy wacko. I’m sure he’ll be called a moderate too…pfffft.
Hard Right,
I know. Who ever believe in Global Warming caused by Humans has to be a wacko leftist. So much for Sarah Palin idea of energy independence from Alaska fuel.
And we say the left tends not to be religious. They are, but in a very different way. Wonder when Gore will be declared a Saint?
(AP) New claims for unemployment benefits reached their highest level in 26 years last week, as companies cut workers at a rapid pace.
The Labor Department reported Thursday that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. That was far more than the 525,000 claims Wall Street economists expected.
It is also the highest reading since November 1982, though the labor force has grown by about half since then.
——
Just found out Chu was one of the Berkley tree sitting loons. I take it back, this guy is every bit as bad as Gore. He will destroy American industry unless a tight leash is kept on him. Bbbbut, obama is picking moderates….b*llshit.
http://news.yahoo.com/s/ap/20081211/ap_on_go_ca_st_pe/chu_profile
Sad that this guy has his intelligence spoilt by his fanatical quasi-religious attitude to global warming. Once these so-called eggheads get religion over global warming, like religious nutcases, they see only what they want to see. I disappointed that he is chinese also, but then again, we have our share of stupid cases.
There is an old cantonese saying: “Smart for a lifetime, Stupid for a moment.”
This is Chu’s stupid moment. Once emotion gets in the way, intelligence flies away.
I have an uncle like that, left at an early age, went to Harvard, is a prof of some science at a “name” american university, but is utterly clueless abt finance, the terrorism problem and so on. He thinks Bush is the secular version of the anti-christ. I like my uncle, but I see so many people like that, smart in one field, but absolute dumbos in much else. Trouble is, they think just because they are smart in their field, they are smart at everything else.
I’ve seen many professors of science think that they can be great investors, inevitably they lose all their money. Always.
I still have not made up my mind on the AGW issue. Both proponents deal in lies, ommissions and exaggerations. From where I sit, guys like Hard Right are just as quasi-religious in their denial.
Chu is better than Gore, at least Chu is a scientist and not a politician.
Ummmm fit, he will now be a politician and considering that he tosses science out the window when it comes to AGW, you should be worried. Not to mention he has no grounding in reality. he has no clue how his alternative energy fantasy will damage the country and it’s economy. So go ahead and root for him.
BTW, I have commented very little on AGW, so you are clueless (in general) as to my view on AGW. My view is that the claim man has caused AGW is inconclusive at best.
“Tosses science out the window” and “inconclusive at best” seem, at best, somewhat contradictory.
“Tosses science out the window” implies he believes something that flies in the face of most scientific evidence.
“Inconclusive at best” admits that there some evidence, maybe just not enough to convince an astute mind such as yours. I for one believe it is plausible that we could be causing a change in the climate. Give it another fifteen years of research and maybe we’ll know more.
I don’t believe the pursuit of alternative energy itself is economically harmful, but a carbon tax to fund it could be. It’s the one of the only things I disagree with Obama on, but McCain had the exact same proposal.
Fit, when I see someone like Chu rabidly and irrationally insisting we are the cause of global warming and demanding action now, it’s clear he is going off emotion and not fact.
As for inconclusive, you are correct. We could be the cause, but we also may not be. As for alternative energy, I am against forcing it’s implementation primarily because it’s not up to the job at hand, won’t be for some time, and is more expensive. A carbon tax would also be disasterous. Combine these things with a “true-believer” with the power to implement them and we get a dead economy.
Chu, Gore or any Climate Change junkie as Energy Czar means trouble.
Why would a quantum physics scientist & Nobel Prize winner jump on the pseudo-science Global Warming bandwagon? Big hint; he was a professor at Rochester, Berkley, & Stanford.
Of course it’s once again all about the money, and it would put Chu in a choice position for distributing out graft money, er excuse me, grant money for more fictitious “pay for play” studies suggesting Global Warming is our real threat. Actually Gore would have lost money as energy czar because he would have to table his carbon credit business ventures for being conflict of interest.
Grant money is the Chicago politics of the academia world after all. The Ivy league keeps turning out something for the corrupt politicians to invest in and tit-for tat, they’ll keep throwing money into college hands to keep that merry-go-round rollin’, as long as they get to keep grabbing for those brass rings, politicians will keep on a’riding til long after the carnival has moved on.