Yesterday we had some choice words indicating why fiscal stimulus in a period of unprecedented monetary intervention (such as now) is about the worst thing that can happen to America, when not even 8 months ago Goldman based its completely wrong and now discredited call that the $100 billion payroll tax "stimulus" would lead to 4.5% 2011 GDP (since retracted). Today, we provide some additional information on just how Obama plans to further stimulate the economy by sacrificing the middle class at the alter of the "this time it's different" gods. From Bloomberg: "President Barack Obama plans to ask Congress for billions of dollars in fresh spending to boost the economy and reduce unemployment, with a new focus on helping the long-term unemployed, an administration official said." But as pointed out the humor is in the post script: "The president also will call for long-term cuts beyond the $1.5 trillion that Congress has charged a 12-member bipartisan “super-committee” of lawmakers to trim by late November, the official said." Preferably cuts that actually affect the US after 2016 when Obama's second term expires. Or even 2013, because according to the mainstream media Perry is now gaining, and who is that Ron Paul fellow?
The comedy continues:
The dollar amount of the additional long-term deficit reduction measures will exceed the cost of the short-term spending that he will propose, said the official, who requested anonymity because plans for the speech haven’t been completed. According to the official, Obama plans to unveil his priorities in a speech in early September and propose a mix of tax cuts and infrastructure spending, including extending two measures that expire at the end of the year: the two-percentage-point payroll tax cut for workers and unemployment insurance benefits.
He will also include new spending and jobs proposals, beyond the ones he has mentioned on his current Midwest bus tour, said the official, without elaborating on the new policies. As part of his jobs package, Obama is said to be considering two sets of ideas: ones that will require legislative action and ones that will can be done by the executive branch alone, without congressional approval.
And now, apparently, Obama is the budget cut warrior.
In an interview with CNN yesterday, Obama hinted at his plans to press Congress for another round of budget cuts, along with more spending.
“We missed an opportunity a month ago when we could have dealt with our debt and deficit in a serious, balanced way,” he said. “We’re going to take one more run at Congress, and we’re going to say to them, ‘Look, here is a comprehensive approach that gets our debt and deficits under control and also accelerates job growth right now.’”
Then again what else can one expect from a president who five years ago said the following vis-a-vis the debt ceiling:
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
As for the efficiency of the fiscal stimulus, this chart from the ARRA vs reality sumarized it all.
From the original ARRA proposal:
And the outcome: