Dear comrade to propose even more deficit spending
Imagine this scenario: You get a brilliant idea that you can beat the odds in Las Vegas. You mortgage your home to the hilt, empty your savings accounts and your kid’s piggybank and drop it all on a single roll of the roulette wheel. Naturally, you lose everything. So, what now? Well, being broke you don’t have a lot of options. But if you’re a bureaucrat and you’re playing with someone else’s money, the answer is simple – double down. That’s essentially what our dear comrade leader will be suggesting in his upcoming State Of The Union (SOTU) speech. Because he’s, you know, focused like a laser on the economy (story here from the WSJ).
President Barack Obama will call for new government spending on infrastructure, education and research in his State of the Union address Tuesday, sharpening his response to Republicans in Congress who are demanding deep budget cuts, people familiar with the speech said.
Mr. Obama will argue that the U.S., even while trying to reduce its budget deficit, must make targeted investments to foster job growth and boost U.S. competitiveness in the world economy. The new spending could include initiatives aimed at building the renewable-energy sector—which received billions of dollars in stimulus funding—and rebuilding roads to improve transportation, people familiar with the matter said. Money to restructure the No Child Left Behind law’s testing mandates and institute more competitive grants also could be included.
“Targeted investments.” Isn’t that what his mega-”stimulus” was supposed to do? It’s clear now that the “stimulus” only stimulated trillions of new debt and was a total FAIL. It’s clear that the government only created government jobs while killing private sector employment. The regime’s economic “geniuses” predicted that unemployment would be around 7% right now, yet it continues to hover around 9.5% – higher than they predicted it would be without “stimulus.” With the national debt breaching $14T there’s nothing left to spend.
It is also anticipated that the dear comrade will propose “significant” budget cuts. We’ll just have to wait for the details to see how serious he is about this. I have my doubts.
While proposing new spending, Mr. Obama also will lay out significant budget cuts elsewhere, people familiar with the plans say, though they will likely fall short of what Republican lawmakers have requested.
In arguing that U.S. competitiveness is at stake, Mr. Obama plans to use his nationally televised speech to try to frame the spending debate with Republicans that is expected to dominate Congress in the coming months. “We seek to do everything we can to spur hiring and ensure our nation can compete with anybody on the planet,” Mr. Obama said Friday after touring a General Electric Co. plant in Schenectady, N.Y. He cited clean-energy manufacturing, infrastructure and education as keys to competitiveness.
Previewing the expected theme of his speech, Mr. Obama on Friday appointed GE Chief Executive Jeffrey Immelt to lead a new President’s Council on Jobs and Competitiveness.
Commenting on the new advisory panel, Senate Minority Leader Mitch McConnell (R., Ky.) said that unless its “first recommendations are to reverse the damage the policies of the last two years have done to the business climate, job creation and the exploding national debt, I fear it will do more to create good public relations for the White House than good jobs for struggling Americans.”
Republicans are casting the White House’s pivot toward competitiveness as an excuse for bigger government and more spending. They say a surge in federal spending and a $1.3 trillion budget deficit are impeding job creation, and dramatic spending cuts are needed immediately.
While House republicans are calling for $100B in spending cuts this year, I hold no hope that they have the guts to do what really needs to be done. Cutting $100B from a $4T budget (with $1.3T in deficit spending) is not significant. That’s 2.5% – pretty much a rounding error. It’s like trying to use a band aid when you really need a tourniquet.
UPDATE: I found this post over at Powerline pretty interesting. The graphic clearly shows the effects of massive government “stimulus” on job growth.
Yet if there is one thing we know with an empirical certainty, it is that increasing federal spending will not, on balance, create more jobs. Of course, whenever the government spends money someone is employed, or, at least, gets to cash a check. This is what Obama had in mind when he said–in a moment of supreme cluelessness–”spending equals stimulus.” What Obama apparently does not understand is that government spending consumes resources, often inefficiently, that could better be used elsewhere. Whenever the government wastes resources, the country grows poorer and job growth is suppressed. This, in crude terms, is why the ballooning public expenditures of recent years have not caused a boom in the job market.
It is blindingly obvious that spending does not equal stimulus, and increasing federal spending will not create jobs. There are two possibilities here. One is that Obama is one of the last people in America who have not figured this out. The other is that Obama knows his proposals are dumb, from an economic standpoint, but doesn’t care. The one thing that more government spending will accomplish is to slide more money to Barack Obama’s cronies and to various constituencies of the Democratic Party. Maybe that is all Obama ever wanted.