If you listen to President Obama and his Democrat and liberal/left cronies carefully, a clear, consistent message comes through on what they think promotes economic growth and jobs. They believe that the way to promote economic growth and prosperity is through increased federal spending, deficits, and debt.
That is not a caricature of their position. This is precisely what they are saying. And they are true to their words.
Still Another Failure of Keynesian Economics
The policy, in fact, began within 30 days of President Obama taking office, with his so-called stimulus bill that increased federal spending by nearly a trillion dollars, which was supposed to create millions of jobs and promote economic recovery. It was followed by further spending increases that altogether have increased federal spending so far by nearly 30% since 2008, to an all time record.
President Obama's own 2012 budget projects a federal deficit for this year of $1.645 trillion, the highest anywhere in world history by several times over. The President's own budget documents project as well that by next year more debt will be run up in one term under President Obama than under all other Presidents in history -- from George Washington to George Bush -- combined. On March 18, the Congressional Budget Office issued a report concluding that federal deficits over the next 10 years under President Obama's budget would soar by nearly a third more than he estimated, totaling nearly $10 trillion over those 10 years, which would double the national debt again to $21 trillion by 2021.
The national debt is already the highest in history as a percent of GDP except for World War II, and on its current course will soar well past that record (109% of GDP). Indeed, our national debt as a percent of GDP is slated to soar past the level that triggered bankruptcy for Greece (115% of GDP), when the financial markets refused to lend the government enough money to cover its enormous annual deficit.
Yet, Paul Krugman has argued in his New York Times column that all of President Obama's increased spending, deficits and debt were not going to be nearly enough to bring back real economic recovery, and that they all should be increased much more. If the definition of insanity is doing the same thing over and over and expecting a different result, then Krugman's columns literally exhibit raving insanity.
In his State of the Union Address earlier this year, President Obama followed Krugman in arguing for still more federal spending as the key to economic growth, jobs, and prosperity. That includes increased spending for high speed trains, high cost bureaucratic education, and higher and longer unemployment benefits, which former House Speaker Nancy Pelosi tells us produce the most bang for the buck in jobs and economic growth. It includes increased spending for a new energy industry based on corporate welfare and bailouts for economic survival, producing high cost energy that will prevent the rest of the economy from surviving, while he shuts off proven reliable energy sources.
Now when Tea Party Republicans move to cut federal spending, deficits and debt, Democrats and their liberal left fellow travelers cry that will wreck the economy and jobs. With the federal deficit this year at $1,645 billion, and federal spending at $3,819 billion, the Senate's second ranking Democrat, Dick Durbin from Illinois, proclaimed on Fox News Sunday recently that $10 billion in cuts for 2011 was the absolute limit. If those wild-eyed Republicans were allowed to cut any more, Durbin claimed, the fragile economic recovery would be stalled, and America would lose the critical federal spending President Obama and the Democrats believe is essential to maintaining America's competitiveness with China.
Rep. Chris Van Hollen (D-MD), ranking Democrat on the House Budget Committee, predicted on CBS's Face the Nation on February 20 that implementing the GOP's full $100 billion spending cut for fiscal year 2011 would cause a loss of 800,000 jobs. Senator Chuck Schumer (D-NY) claimed the GOP spending cuts would risk a double dip recession.
And regularly on The Larry Kudlow Show on CNBC Robert Reich pops up to argue the same, saying that cutting federal spending, deficits, and debt now would impair the recovery. Recently, Ezra Klein of the Washington Post appeared on the show taking the generational baton to argue as well, so confident of establishment authority, that all the federal spending, deficits and debt were essential to propping the economy up right now.
This is not new Democrat propaganda spin. In fact, it reflects precisely the oldest, establishment, hoary, outdated in fact, Keynesian thinking dredged up from the 1970s and even the 1930s.
When Will They Ever Learn?
Keynesian doctrine holds that economic growth is stimulated by increased government spending, deficits, and debt. That is supposed to increase demand, which is supposed to lead to increased production to satisfy that demand, restoring economic growth. It never worked in the 1930s, as the recession of 1929 extended into the decade long Great Depression.
It was a proven failure by the 1970s, for anyone who was paying attention, as ever worsening cycles of inflation and recession culminated in double-digit inflation, double-digit unemployment, and double-digit interest rates. Under Keynesian economics, recession is caused by too little aggregate demand, and inflation is caused by excessive aggregate demand. Since it is impossible to have both too much and too little demand at the same time, recession and inflation together are not supposed to be possible under Keynesian doctrine, and so the 1970s could not have actually happened. The "Progressive" Left has consequently decreed the 1970s to be cast down the memory hole, and rewritten as a classic time of great prosperity, with anyone who refuses to play along shouted down.
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Peter Ferrara is Director of Policy for the Carleson Center for Public Policy and a Senior Fellow for the Heartland Institute. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream, and How to Turn the Tide Before It Is Too Late, forthcoming from HarperCollins.
Obama makes Carter look smart.
Ouch! That hurt!
Comparing Obama to Jimmy Carter is an insult to Carter.
Vouchers, private schools, are all to the good. Yet education will be even more expensive in the future-- look in the mirror to see who pays for it. Then there's the legal, court system, a revolving door, recidivist one.
Federal spending, deficits and the national debt suck capital out of the private sector, thereby slowing or even reversing economic growth and undermining national security. We need draconian cuts in federal spending (about $1.5 trillion) coupled with the dismantling of the entire federal income tax system in favor of a single national sales tax, aka Fair Tax (www.fairtax.org).
"Unemployment among African-Americans had persisted during that period at 15% or above. Among Hispanics it persisted well into double digits as well. Among teenagers it was stuck at 25%, 45% for black teenagers. These groups were truly suffering a depression." It is hard to feel sorry for these groups since they're Obama's base and will probably support him in 2012.
Very good point. One hopes that they will actually learn a lesson, but I won't hold my breath.
Don't forget Rush, Hannity, Coulter and Ingram who did everything they could to destroy the GOP Congress (that was on the way to balancing the budget by 2015), undermine Bush and gave us Reid/Pelosi/Obama and this massive debt . . .
Another great article, Peter....filled with facts and figures. My biggest worry is that the "INTEREST" on all that debt will hamper our children, and their children , and put a weighted bundle on their backs to carry and to be burdened thru-out their lives....and YES, caused by a political party and irresponsible PRESIDENT. Now they consider the TeaParty folks the ones they must destroy and shame the Republicans for ...LISTENING to them, while they throw "PENNIES" on the table for their idea of DEBT & DEFICIT relief!
The Demos don't want to cut anything. The Republicans are talking about max. $100 billion. This is less than 1% of the national debt, which is growing by about $150 billion per month. The debt is equal to about $126,000 per taxpayer, and approaching 100% of GDP. The failure of both parties to cut the size of government is undermining our economy, our national security, and freedom.
In November 2012 we'll vote Obama, more Senate Democrats, and some Republicans out of office, resulting in the Republicans having control of both the White House and Congress. I seriously doubt that they will live up to our expectations. They will lack courage, as usual.
COURAGE....The number 1 attribute to look for in any candidate you plan to VOTE for...Also known as GUTS...cojones, moxie, face danger, spunk, bravery, spirit, fearlessness, heroism, spunk, valor, grit, valor........The OPPOSITE being...COWARDICE !!! ( in case any pols wannabes looking on)
I, for one, am raedy to vote for someone who, when faced with a lie from either side of the isle, calls them on it, point blank, to their face, on the House or Senate floor... then hits the TV circuits saying the same thing. And if he's badgered by the Statists he simply, and publicly, tells them to go screw themselves because they are self-serving sacks of dog crap.
The time for tolerance and cooperation is over. Why the holy hell should we tolerate and cooperate with people who very clearly do NOT have OUR liberty as their main interest?
ID, I agree completely. When W was elected the R's had control of everything. I hoped that they would cut spending, cut back the size of the federal government, and do what the people wanted, and they managed to do absolutely NOTHING with the exception of spending money like it was going out of style. We'll give the R's control back next year, but if anything substantive comes of it I will be surprised. I'm afraid we don't have a two-party system, we have one party with two agendas: one faster, and one slower. Nothing short of drastic action on the part of SOMEONE will stop this country from becoming Zimbabwe in the near future.
NO
We do not need government cuts. What we need is government dismantling. I would guess that for every dollar sent to D.C. we get 10 cents in return.
The federal government has become the prodigal son. Repeal the sixteenth and seventeenth. Only then can we possibly bring order back to the madhouse. Of course, we'll need a national organization for the resulting confusion. Like AA, might be it's time to devote efforts to LA (Liberals Anonymus). "Hi, my name is Chuck, and I'm a liberal".
If obama's assault on our country is allowed to continue with his re election, this country is over with.
Anyone recall AmSpec asking this question during the Bush Admin? Does anyone recall AmSpec urging conservatives to oppose the Bush Admin when it was recklessly expanding "federal spending, deficits, and debt"?
Me neither.
FACT: If George W. Bush was pursuing every single policy that Obama is, in the exact same way, most AmSpec writers would be cheering him on.
Democrats gained control of Congress in January 2007. Since then the national debt has increased from about $8.6 trillion to $14.1 trillion, or 64%. Now that Republicans control the House, Democrats are fighting even the smallest budget cuts.
M. Lindstom, where were you when George W. signed the No Child Left Behind Act? - certainly not reading AmSpec. Where were you when Bush signed TARP? - not reading AmSpec. Where were you when the Chrysler/GM bailout boondoggle was set in motion - again, not reading AmSpec.
Instead, all you offer is the tired old DNC drivel as if it were actually relevant to anything at hand. Look around, does the Democrat only answer - throw more money at the problem - actually work? Anywhere? Any problem? Any time?
Dear Lindstrom.
Since you seem to have a crystal ball that see's into alternate realities can you tell me what would have happend if the media had done it's job and not covered for Obama or did everything in their power to make him a American Idol President?
Troll!!!!
Yes I can - McCain would have been elected president, he would be bailing and taxing and spending just as much as Obama is now, and you would be defending him and cheering him on, because he would have an (R) next to his name rather than a (D).
Anything else you'd like to know?
Yep, your shoe size. Because it obviously matches your IQ. I voted for Thompson. Held my nose to vote for McCain as the lesser of two evils.
BS!!!!!
Obama in one month doubled Bush's last yearly deficit. There is no comparison. Bush was within the traditional GDP expenditure of all US Presidents including Reagan (Bush was at a lower % generally) and Clinton (who he equaled).
While you were obviously deaf and blind in 2005 the conservative crack up was caused by TAS writers like James Antle III whininig about profligate Republican spending and urging people to vote for the two-faced, lying blue dog Democrat scum like abysmal Jim Webb. One moron attorney writing in TAS said we could "afford to throw away an election or two." We are now reaping the results of their chrulish commentary attacking the GOP Congress and President Bush.
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