It’s fair to say that a trio of announcements from the White House are enough to signal a new tone, if not necessarily a new policy, on economic issues. The policies are the result of the continuing failure of the 2009 stimulus package (and the Bush stimulus package before it) and the continuing failure of ultra-low interest rates to produce substantial growth in the economy, particularly with regards to job creation — and therefore also caused in part by substantial political pressure on Democrats who have come to fear losing control of Congress in the mid-term elections (although the odds still favor narrow retention of Congress by the party in power).
The proposals are these:
- Businesses will get 100% deductions for new capital equipment purchases
- $50 billion will be spent to improve and create road and rail infrastructure
- $100 billion in tax credits to businesses, to be “paid for” by closing unspecified tax loopholes elsewhere
For those of you liberals who are keeping track at home, two out of three of these qualify as direct corporate welfare and the third is — what the 2009 stimulus was sold to us as having done but apparently did not. Not that there aren’t still New Deal cheerleaders out there, but jeez, why not go the last step and revive the WPA? I’ve a soft spot in my heart for the CCC and that might produce some actual long-term environmental good, so why not let’s pay college-age kids to plant trees instead of going to school again! (Or we could just continue requiring timber companies to replant as a condition of getting permits to log national forests, but if I were so smart I’d be in the White House, right?)
Now, I like the idea of lower taxes and using tax credits and deductions to mold economic behavior. So it’s not like criticizing these policy proposals comes easy for me. But recall that the 2010 deficit was already projected to be $1.5 trillion, so we’re looking at raising that to something like $1.7 trilllion here. Recall also that we were promised $800 billion in “shovel-ready” projects which a year and a half later have produced — some road resurfacing and a lot of pork. Consequently, the deficit comes with ten percent unemployment.
Again for those of you liberals playing along at home, I know you feel the instinct to say, “Without the stimulus, it would have been much worse! It would have been 1930 all over again!” Maybe, maybe not. We won’t and can’t know that; to say it would or wouldn’t have been 1930 all over again is an article of faith and nothing more for anyone on either side of that dispute. I am skeptical of claims that the house would have fallen in completely; the rolling crash of 2007-2009 was not the result of commodities producers reaching peak market capitalization, but rather because the public came to understand that financial services institutions were sitting upon a larger-than-previously-realized amount of nonperforming and undersecuritized real estate loans. Cutting losses means accepting losses, and therefore a lot of institutions took losses. Then the government got involved and played favorites with some and not-favorites with others, and now we’re… well, we’re where we are, with anemic GDP growth that is not replacing jobs lost over the past couple of years.
So I’m hearing President Obama say that foregoing and/or spending another two hundred billion to two hundred fifty billion dollars or so is necessary to start creating jobs — but fool me once, shame on you; fool me twice, shame on me. (Wait, I wasn’t fooled the first time Obama suggested this. Or the time before that, when President Bush suggested it.) Spending nearly four times this much money before didn’t do much of anything; why should it do anything this time? Someone needs to explain to me why adding this money to the debt, at this time, in this way, is going to do something different than the last time we bloated the deficit and punted the problem of paying for it all to the next generation.
I’m at a loss to say which facet of this amazes and disgusts me the most. Is it:
- The condescension that Americans will be so foolish as to give the government a third bite at this apple? or
- The readily-apparent linkage of the Democrats’ current political troubles to this empty campaign promise? or
- The lack of originality in the proposal — does the President’s economic playbook really only contain one page? or
- The complete disregard for the fact that we’re so far in debt already that the President’s own top military and intelligence advisers have said the debt is our biggest national security threat?
While I’d love to see lower taxes we need government revenue so we’re just going to have to accepting paying our taxes at the current, or even a slightly increased, rate for the foreseeable future. While I like new roads as much as anyone else that’s about the only tangible stimulus result we’ve seen and it isn’t doing a whole lot for the economy. And really, I’m supposed to come back and eat at the trough of stimulus spending for a third time?
This is the marriage of the worst facets of New Deal economics with the worst facets of trickle-down economics — all that we need is to blend in some Great Society and then the package will be a complete ménage à trois of useless deficit spending. Oh, wait, we got some Great Society earlier this year — it was a big f–ing deal, remember? Nothing good will come of this and in the long run, America is going to regret it more than it likes the benefits. If they get behind these ideas as a whole, Democrats deserve to lose Congress this November — not that free-spending Republicans deserve to win it back.
Ugh. I’m going to go clean up dog vomit in the other room because that’s bound to be more pleasant than contemplating this any further.