The Administration’s Lame Plan on the Economy? It Gets Worse

You know that article portraying the White House paralysis in the face of 9.1% unemployment? Should they do nothing and run on the promise of more deficit and entitlement cuts in a second term? Or should they do almost nothing, like renaming the Department of Commerce “The Department of Confidence Fairies”?

It gets still worse:

There’s an article in today’s NYT on the economic debate within the White House.  The print version—not the online one—contains this quote from an admin official:

It would be political folly to make the argument that government spending equals jobs.”

Really?  I mean, I get the reluctance, and certainly the “spending=jobs” frame, while essentially correct, may not be the right way to frame it.

But in fact, the best way to get people back to work right now, with consumers weakened and investment on the sidelines is through more government spending…it should be targeted and temporary, but jeez, the President himself has been making this point, and correctly pointing out that R’s are blocking him on it. [my emphasis]

The President did an event on Thursday in a shiny new factory that owes its existence to government spending. The jobs at that factory are some of the best jobs created in the last decade, because they’re innovative, they include high end jobs in a new segment, and (if the President doesn’t send them all away with trade deals) they make us competitive internationally.

But rather than actually claim credit for those jobs–which Obama was willing to do a year ago–he now says “freedom” created those jobs, not government spending.

17 replies
  1. Mad Hemingway says:

    The house (aka Wall Street) wins again. All that money to candidate Obama paid dividends.

    I am confused why Bernie Sanders and Ralph Nader want someone to primary Obama even if they can’t win. I thought the whole point was to get someone else as the nominee.

  2. Mad Hemingway says:

    Btw, here’s where people ought to be raising some hell.

    $1,238.56 per senator for “Senatorial Health and Fitness Club Memberships”

    $333.87 per Senator for Hair Care Revolving Fund”

    $1,666.73 per Senator for “Senate Gift Shop Revolving Fund”

    $2988.21 per Senator for “Stationery”

    $44,164 per Senator for “Use of Foreign Currency”

    $135,249.22 per Senator for “Miscellaneous Costs”

  3. Jim White says:

    The stupidity coming from these guys just keeps getting worse and worse. Hard to believe there are still fourteen and a half months before the election.

    I’m really glad my hair is too short to pull out.

  4. P J Evans says:

    It sounds like his advisers want him to be a one-term president, and he’s going along with it.

    I’m beginning to think Our Glorious Leader is an idjit.

  5. JohnT says:

    That, is who they are

    That is what they believe

    I wrote a diary yesterday, mainly because I thought it’d be a breath of fresh air when compared to all the intransigence of our political “leadership.”

    My intention was that it be about science, because that’s one thing that can unite us all – with the exception being the fundamentalists. With a cool video showing Lenz’s Law and Eddy Currents in action; an epic rant by Neil deGrasse Tyson on our lost dream; and examples of NASA derived R&D technology

    Maybe I set it up with my own comment, but the other comments focused on the – I don’t want to say rant, because it was more than that – the lament, by Neil deGrasse Tyson and the budget cuts at NASA. The thing is people can’t see the things a good, well-run egalitarian government can do any more. I tried to explain myself in a comment

    There’s an article I’m trying to read through at crooked timber by a blogger named Henry, based on a book and another article by Suzanne Mettler. And the article summarizes her theory – which I agree with – that people don’t realize what government does for them which is why (or part of the reason) people keep voting against their best interests. She calls it The Submerged State where the conservatives and the DLC types have had some good ideas, but the ideas have come at an expense

    …Mettler’s claim is not that the neo-liberals of the DLC are evil villains, or that their policies are useless – some of these tax breaks (the EITC in particular) have been valuable. But the turn towards submerged state measures as the “policy tool of choice” has pernicious broader consequences. It means that people fail to understand the ways in which they actually benefit from government. This not only makes it hard both to build a long term constituency for welfare state expansion where such is merited, it cripples democratic debate – people have difficulty in talking coherently about the role of the US state in providing welfare, when many US state functions are systematically obscured.


    I think it’s the same thing with NASA. People see astronauts flying around in the shuttles and space stations, but don’t realize the ancillary benefits.

    I think it’s kind of like the food stamp program, people don’t realize that for every dollar in benefits there’s a dollar forty or dollar fifty that’s returned to the economy

    PS it’s actually 1.73

    Trying to make my way through Mettler’s article too.

    Here’s a jaw dropping stat

    These tax expenditures for individuals and families represented 7.4 percent of GDP in 2008, up from 4.2 percent in 1976. (Tax expenditures for business, such as those for the oil and gas industry, made up another 1 percent.) By way of comparison, Social Security amounted to 4.3 percent of GDP in 2008; Medicare and Medicaid, 4.1 percent.

    Sorry to hijack the thread, but that is who they are

  6. BeccaM says:

    For one thing, they need to stop calling it “government spending” — which has all the connotations of some profligate going on a credit card spending spree to buy a bunch of stuff he doesn’t need. It’s “spending” if the money is going to no good purpose… like when it’s given to already profitable oil companies in the form of subsidies.

    When it’s intended to create jobs, you call it “investing in our future.” When it goes to infrastructure, you call it “fixing our neglected bridges, roads, water pipes” and “modernizing our information networks so they’re the fastest and cheapest in the world, and so that every American can have high speed access to the Internet.” When it goes to education, it’s “investing in our most precious resource: Our children’s futures.” When it goes to unemployment and Social Security, it’s “helping our fellow Americans, because it’s the right thing to do.” When it goes to Medicare and Medicaid, it’s “we firmly believe access to basic medical care is a fundamental right, and keeping our poorest healthy is a good idea for all of us.”

    But really? Obama actually said that freedom build that factory? I’m serious: Has he gone and adopted all of the GOP talking points now?

  7. P J Evans says:

    Maybe if they were called ‘association fees’ or ‘association dues’ instead of taxes, people would get the idea. They’d probably still want to freeload, though.
    People who refuse to pay taxes, or think that taxes should only apply to others, but still think they themselves are owed services, should maybe have their voter registrations suspended for lack of responsibility.

  8. prostratedragon says:

    @Mad Hemingway: Not sure what their point is, but getting people used to trying to do something might be good right about now. Even failing gives you an agenda, if you want to pursue it.

  9. host says:
    Nouriel ‘Dr. Doom’ Roubini: ‘Karl Marx Was Right’

    ….Companies, Roubini said, are motivated to minimize costs, to save and stockpile cash, but this leads to less money in the hands of employees, which means they have less money to spend and flow back to companies.

    Now, in current financial crisis, consumers, in addition to having less money to spend due to the above, are also motivated to minimize costs, to save and stockpile cash, magnifying the effect of less money flowing back to companies.

    “Karl Marx had it right,” Roubini said in an interview with “At some point capitalism can self-destroy itself. That’s because you can not keep on shifting income from labor to capital without not having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What’s individually rational…is a self-destructive process.”

    Roubini added absent organic, strong GDP growth — which can increase wages and consumer spending — what’s needed is large fiscal stimulus, agreeing with another high-profile economist, Nobel Prize-winner Paul Krugman, that, in the case of the United States, the $786 billion fiscal stimulus approved by Congress in 2009 was too small to create the aggregate demand necessary to advance the U.S. economic recovery to a self-sustaining expansion.

    Absent additional fiscal stimulus, or unexpected strong GDP growth, the only solution is a universal debt restructuring for banks, homes (essentially households/families), and governments, Roubini said. However, no such universal restructuring has occurred, Roubini said.

    Without that additional fiscal stimulus, that lack of restructuring has led to “zombie houses, zombie banks, and zombie governments,” he said….

    Watch the Roubini interview:

    Repub wannabes are hard at work making Obama seem reasonable and less menacing than any of them come off as. In the race to the bottom, Obama “wins” a second term, a mandate to complete his work of destroying the economic security of the bottom 80 percent of U.S. households.

  10. phred says:

    Given that Billion Dollar O has hosed his base, and given that there are no serious contenders on the Republican side, one has to conclude that Team O are counting on his re-election via Republicans (and conservative Independents) who are turned off by their own side, while Dem supporters stay home (or vote third parties) in droves. It’s all too depressing to contemplate.

    The wild card is what will happen to Congress. Given their popularity these days I can imagine a fair number of incumbents losing, but I haven’t the faintest whether either chamber would switch hands. And even if one or both chambers flipped, there is no evidence of any significant change in policy on the horizon, now that they are all one big happy austerity family.

    All in all, even if O gets a second term (ick), there is no evidence that anything will change from where we are right now. Which means the economy (and federal policy overall) will be stuck in our domestic quagmire until at least the end of the decade if not longer.

    For a guy who campaigned on hope and change, I see no hope at all for any change whatsoever.

    Heckuva job Barry.

  11. dustbunny44 says:

    >>But rather than actually claim credit for those jobs … he now says “freedom” created those jobs, not government spending.

    And he deserves all the rewards he’s received from not claiming that credit.

  12. host says:

    @P J Evans:
    I don’t fully understand your comment,

    “…People who refuse to pay taxes, or think that taxes should only apply to others, but still think they themselves are owed services, should maybe have their voter registrations suspended for lack of responsibility….”

    I doubt that you intended for it to have a Reaganesque, “there is a woman in Chicago…” “Welfare Queen” flavor, but, at the least, the point you seem to be making is similar to this, from Dave Ramsey.
    “…we’ve got 49 percent of Americans last year that did not pay a dime in federal income tax, not one dime, and mathematically we’ve got this bunch of folks who say the rich and business can solve it all. There’s not enough money in the rich and business to solve it all….”
    This is propaganda, intended to incite resentment towards the poorest and least powerful, just as Reagan’s “Welfare Queen” and “Strapping Buck”, and the “video documentary” OP against ACORN were.

    The bottom 80 percent of U.S> households own 12.3 percent of private wealth. These households are on the hook for almost all of the outstanding consumer debt. The bottom 50 percent own just 3 percent of the wealth, and 24 percent of households have a negative net worth.

    The people who do not pay federal taxes pay SSA and medicare withholding on 100 percent of their gross income. Incomes above $200k pay these taxes on about half of their income.

    The wealthiest invested big in driving the federal inheritance tax, levied since 1916, from 50 percent in 2000 to zero in 2010. No provision was made to raise an equal amount of this lost tax revenue, or to offset the loss through spending cuts.

    The last time wealth concentration was so acute, in 1928, the response of the voting majority, over the following 31 years, included the creation of SS, unemployment insurance, minimum wage and overtime pay laws, laws promoting and protecting union organinizing, and the right to collective bargaining, and the NLRB was created to monitor, enforce, and to arbitrate labor disputes. By 1959, annual income above $400k was taxed at a 90 percent rate.

    Recently, in addition to a 51 year period of income tax cuts, a 65 year period since the Wagner act weakened union protection legislation of the 30’s, and the dramatic and still not settled roll back of inheritance tax rates, there has been a successful obscuring of the acute wealth concentration and dramatic rise in the GINI coefficient by the media focus on taxing income, and not on the real problem, concentrated wealth.

    From 1928 to 1960, the last wealth concentration crisis was wound down through the orderly projection of the political will of the majority.

    The “problem” is not that the bottom 50 percent are paying no income tax, but are receiving benefits “funded” by taxes collected from others and from government borrowing, the problem is that the wealthiest have interfered with the ability of the political majority, the “have nots” to project their will through their voting.

    This means of projection of will, on display with such effective results from the last wealth concentration peak until the Wagner acts and the first round of tax cutting under JFK, is no longer an option for the “have nots.” An additional catalyst is that never have the prisons been so full or the elite so above the law.

    This is a set up for the alternative, historical model for the settlement of acute imbalances which were relieved through the ballot, as recently as two generations ago. With the option of the ballot bought and stolen away, the bullet will be the method of relief, as it almost always has been, and before it, the sword. This summer, the wealthy right of center sent a message to the rest of us that they prefer to blow up the currency, the government’s credit rating, and their own stocks and bonds valuations, rather than compromise of income and inheritance tax rates. They invested in the removal of a political solution. They discount or ignore what history indicates will happen next. The reaction of the majority in Jefferson County, AL, will be an indicator of how far off, “next” is. So will the results from the JSCDR’s gang of 12.

  13. Kathleen says:

    What ever program the Obama administration finally comes up with it better be big… or it will be too little too late.

    If Romney wins the Republican nomination Obama really could be a one term Prez

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