President Obama has a need to further stimulate the economy.
But does the economy really need more Obama-styled stimulation?
Speaking in Paris last week, Christina Romer, head of the White House Council of Economic Advisers, noted that “It would be wrong to tighten fiscal policy immediately, as that would nip the nascent economic recovery in the bud.”
During a week when Obama was busy raising campaign cash for Sen. Barbara Boxer in San Francisco, taking photos with the Duke University basketball team at the White House, lunching with Bill Clinton, and — yes — holding his first press conference in 10 months to talk about the gulf oil spill, Romer traveled to Europe as the President’s representative to the annual meeting of the Organization for Economic Cooperation and Development, a 31-nation watchdog that includes the world’s richest economies.
While there, Romer astutely observed that “unemployment is still painfully high,” and that “nothing would be more damaging than a protracted recession that brought about permanent high unemployment.” She further noted that the president was planning further targeted fiscal actions to stimulate the U.S. economy, after his current economic stimulus plan “winds down” next year.
Romer’s remarks, innocuous and non-substantive as they were, nonetheless were consistent with the Obama administration’s overall public posture on the economy. Yet her comments also serve as an additional reminder of two extremely important truths — truths that at times seem all but forgotten — in the midst of the ongoing economic hardship.
For one, Obama’s “need” to stimulate the economy, and the genuine needs of the economy itself, are not the same thing. Elected politicians like the U.S. president have an immediate need to appear as though they’re doing something constructive, and to make people feel good about the economy (or at least as good as they possibly can) right here, and right now.
In the past 16 months, Obama’s immediate, short-term political need has produced a lot of public policy that seeks to “rescue” people — rescuing them from the economic downturn, from “greedy bankers” and “rich executives,” and from their own destructive behavior. Obama looks like a hero, presumably, but his policies don’t necessarily improve the economy.
Yet, another important truth in the midst of the murkiness is that far too much of this type of economic policy is built upon the “false assumption of government goodness.” This little axiom stipulates that greed, scandal and injustice only happen in the private sector economy at the hands of “rich people,” while those in the public sector — politicians and bureaucrats alike — always do the right thing, manage economic resources to their best possible ends, and act selflessly in the interests of the common good.
Thus, it is presumed, everything that President Obama seeks to do with our nation’s economic resources is for the good of everybody, done out of the benevolence of his heart. Nationalized health care is all about Obama blessing us with goodness, right? It’s so good that over half the states in our union are suing the federal government to prevent the implementation of the President’s “plan” and nearly 70 percent of the American electorate now wants it repealed.
Good, short-term politics doesn’t always lead to sound, rational, long-term economic policy. May America elect to “stop the stimulus” — before it kills us all.
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Austin Hill (www.AustinHill.net) is author of “The Virtues Of Capitalism” and a frequent guest host for Arizona’s Newstalk KTAR (92.3 FM).
wdgnas posted at 4:59 am on Wed, Jun 2, 2010.
just ask the governor of louisiana about being rescued from the oil spill in the gulf. not too long ago he was talking about not accepting any stimulus money. now he has both hands out not just asking but demanding the federal government help his state. talk about politics. i am shocked...
Rich posted at 8:54 am on Thu, Jun 3, 2010.
About the only way to stimulate the economy is to free the creative people to create new things. Big government works directly against that. People need to buy again, especially real estate. But the government allows personal credit to factor into a mortgage loan. The recession would not have happened if the government hadn't done that, allowed banks to inflate property value based on an invasion of privacy. A mortgage loan should be guaranteed by what is being mortgaged. When it isn't the market is headed for collapse.
Right now, of course, President O needs to get the leak in the gulf handled. He's making Bush's handling of Katrina look stellar by comparison.
allamer posted at 12:45 pm on Tue, Jun 8, 2010.
The $787 billion "stimulous" package had to be passed immediately, without scrutiny by legislators or the people, or the sky would fall. If the government just spends a ton of money, the economy will be "stimulated", right? Well, no. The state and local politicians and favored businesses will certainly be "stimulated". They always get stimulated when Congress passes a bill full of pork and earmarks. Why wouldn't $787 billion be stimulating to politicians and special interests? Unfortunately, the economy is not responsive to political agendas. It IS responsive to economic activity by individuals who provide useful goods and services that people and other businesses need or want. Government's only valid role is to enforce laws which prevent fraud in the markets. Instead, government has allowed and enabled widespread market manipulation in the housing, credit, labor, and investment markets. We see where that has gotten us. Then they hit us with the "stimulous". So now we have state and local budgets being subsidized by federal "stimulous" funds. Also, "green" business ventures and politically connected government contractors are being subsidized with stimulous funds. However, the real economy is shutting down due to the lack of credit for small businesses and uncertainty caused by government, like the health care law. But, the national debt is definitely being stimulated.