Sunday, February 22, 2009

Obama's Economic Schizophrenia

Does anyone in this administration have a clue? Sure doesn't look like it.

The first month of the administration was dedicated to passing a massive deficit spending bill it fondly refers to as a “stimulus” package. The entire logic of the program was to spend as much money as fast as possible, and it doesn't particularly matter on what. It's a classic Keynesian approach to the supposed problem of insufficient aggregate, and in particular, consumer demand.

One could argue that years of borrowing money to spend today from consumers, businesses, and government is what caused the problem and that doing more of the same is unlikely to solve it, or that there were better means to treating the credit crunch and recession, but at least the spend spend spend spend debt debt debt debt plan could be taken to at least have an internal logic.

Particularly if one took enough Quaaludes.

The second month is apparently devoted to putting forth a budget designed to restrict demand, and suck money and purchasing power out of the system though tax increases and government spending cuts. In other words, if you believed that the economy needed the stimulus of deficit spending, the budget proposal directly contradicts the rationale for the stimulus bill.

Obama, who never met a far left spending proposal that he didn't like, is not going to make actual cuts in the overall level of government expenditure.

Trim money from national security to fund ACORN and community organizers? All too plausible.

Punitive taxation on incomes and investment?

That's a given. Downward definition of what it takes to be “The Rich”? Absolutely.

I certainly wouldn't look for a bonanza in capital gains tax receipts under this crew. The real stimulus here is for the tax and estate planning specialists to get busy and shelter income until an administration with some sense returns to Washington.