Yesterday, after a hectic weekend with family and friends, I, a blogger without a paid staff (indeed without any staff) put forward a proposal to address Standard and Poor’s downgrade of the federal government’s financial condition. Within several hours, our readers had offered their own suggestions and critiques of some items on my lost. Now, Jennifer Rubin is also soliciting views from her readers.
A few hours before I offered my proposal, President Obama addressed the downgrade, roughly 50 minutes after he was slated to speech on the crisis. Instead of putting forward a plan or even an outline of a plan, he announced that he intended to present his “own recommendations over the coming weeks on how we should proceed.”
Over the coming weeks? A number of savvy pundits and financial analysts had been predicting the downgrade for weeks. Shouldn’t the President of the United States have been prepared for this?
He had a whole weekend and a stable full of advisors. Couldn’t he have come up with an outline on his own and farmed it out to them, had them refine a few of his points, discuss the political and policy pitfalls of each before drafting his statement?
As Bryan Preston put it, in response to the downgrade, he showed “even less ability to lead” than he had during the debt debate. He made “no substantive moves at all to calm the markets. He was silent for days while his political team engaged in one of the most obviously dishonest responses in living memory, and then he was late to his own speech today.” (Via Jim Geragthy’s Morning Jolt, available by subscription.)
Glenn Reynolds has a nice roundup of pundits offering views similar to those Preston put forward.
Now, if a blogger who follows politics can come up with a plan to address the downgrade, why can’t the President of the United States, with a whole staff paid to help him lead the nation, do the same?
President Obama is an incompetent, narcissistic community organizer; he manipulates people from afar to get them to do his bidding. However, nationally, this doesn’t work. The Office requires leadership which Obama lacks. He will never come up with his own plan; he’s too bound to his Marxist ideology. Furthermore, if you think about it, Obama has little political experience to fall behind. He has nothing. His is nothing. He’s a manufactured MSM creation–a prefab thing. Obama is artificial to the point of not existing; he’s shallow & vain. He’s the incredible shrinking President of the United States! Obama is the Nothing Man.
I think we know why the Obamacrats won’t put a plan on the table.
In reality, the Obamacrats want to enact massive tax increases so they can continue current levels of spending. Everybody knows marginal increases on jet owners and other productive people won’t come close to cutting the deficit. 50% across the board tax hikes are what would be needed. But stating that openly would be political suicide.
They also are willing to cut… absolutely nothing. The Obamacrats are Confederation of Special Interests all of whom are suckling off the Federal teat. The only thing they can cut without enraging some constituency is National Defense. And even completely eliminating defense spending would leave us with a trillion dollar deficit.
So, the Obamacrats refuse to present any plan for reducing the deficit. They just smear people with actual plans as “terrorists” and spew empty platittudes about “a balanced approach” and “modest reforms.”
Face it, this guy is hopeless…and in way over his head. Far-worse than even the micro-managing Jimmy Carter who got lost in the details and lost sight of both the trees and the forest.
And after all, Duh Won takes more vacations that George W. Bush ever did during his TWO terms in office.
Regards,
Peter H.
Hi Dan,
Here are a few ideas as to why:-
1. To put forward a plan quickly would look like a panicked reaction to S&P’s downgrade, rather than a considered action of a leader. And I think it would be reported that way by much of the right-leaning blogosphere (the “he can’t win, no matter what he does” rule).
2. The plan that you put forward would push the country back into recession (assuming those cuts would take place in the 2012 fiscal year). So Dems will not vote for it, given elections in 2012, and would rather demonize GOPers who did.
3. Obama knows that any plan he puts forward is dead in the water because his plan would incorporate revenue increases (which the Dem side of the aisle would demand), and the GOP will not agree to do that (even if Boehner was arguing in good faith, he cannot drag his party to accept what he might negotiate, if it includes revenue increases).
4. Obama is cornered by accepting the GOP’s rhetoric/metaphors as a basis for discussion (e.g., “the nation is a family, having to live within its means, etc”) so he doesn’t have anything to offer by way of a plan consistent with that viewpoint that can get him re-elected in Nov 2012. He needs increased spending in the short run, and debt cutting in the long run, but he can’t make the conversation go there, given his prior pronouncements and given GOP views on this thing. In a nutshell, Obama is now totally reactive, not setting the agenda, relying on the GOP to give him something to run with for political advantage. How likely is that to happen? That I do not know. A week is a long time in politics, but if there is a game changer I think it is external to all the politics, which is deadlocked at the moment (maybe a total collapse of public support for one party changes things?.
Sorry, Cas, putting a plan forward wouldn’t look like a panicked reaction as long as he was clear that he needed fleshing out.
As to my plan pushing us into recession. Hardly. The prospect of the federal government retracting its regulatory arm would encourage many small businesses to expand.
As to your final point, he has increased spending. It didn’t work. Didn’t fix the economy. And it increased the deficits. Increased spending is not the answer.
Hi Dan,
I think that what you say is true of you, Dan. But my sense is that news organization like Fox and more ideologically confrontational blogs would be eager to cast it in that light, especially if the plan had parts that were not to their liking.
I grant you that less regulation might have an expansionary effect, Dan. I just don’t think it would overcome the impact of an approx 6% drop in government spending as a % of GDP. The impact on Aggregate Demand would be pretty significant, and more than make up for the benefits from deregulation.
That is one way to look at events. Another is to say that when GDP drops >8% in a quarter, the problem you have is much bigger than the one you thought you had. In other words, they needed to spend more then they did; a point made by many economists (I know, this is a very unpopular opinion in these parts). Proving counter-factuals is near impossible, so I understand the skepticism you have. In any case, you are not likely to see spending increases because Obama cannot get them through.
Would I be right to assume that you are in basic agreement with point three?
Cas. So Obama is unable to do anything because one part of Congress is controlled by the GOP. Reagon brought us out of a far wrose mess and his opponents controlled all of Congress. Obama is not a leader. He is only a community organizer.
Cas, don’t know if I’m in basic agreement with Point 3 because I’m an idealist and do hope people can agree to enact real reform as happened in 1986 with a tax reform bill that was effectively Bill Bradley’s brainchild but soon gained the backing of a number of conservatives, including the Gipper.
So, I don’t agree that any plan Obama puts forward is necessarily dead in the water. Any plan to increase the government’s roles in the economy is indeed dead in the water, but if Republicans balk at a plan to scale back the state because it would have Obama’s imprimatur, then they deserve the same ridicule I meted out to Tom DeLay.
Hi JR,
I don’t think you will be surprised to hear that I don’t think that Reagan presided over a “worse mess” in terms of the economy (For example, the “we are all going to die” moment in 2008–when Lehman Bros went belly up didn’t happen in the 1980s downturn; nor that appalling >8% fall in quarterly GDP). Do you think that Dems were as unwilling to work with Reagan as today’s Repubs are unwilling to work with Obama? I grant that Reagan may have been better able to get people to work with him, but I also wonder if this is a more polarized time. I don’t think Dems, for example, would have ever seriously considered debt default in the 1980s in the same way that Repubs did just recently.So, I remain unconvinced that even the Reagan level of charm, and bargaining skills would have been successful in today’s political climate.
That’s what Democrats always promise. “We’ll eat our peas later if you buy us candy now.” Somehow, the cuts never seem to happen.
Cuts in Government spending may hurt in the short term, but only someone who lives in a fantasyland could think 1. The current level of spending is indefinitely sustainable and 2. The Democrats will ever really follow through on promises to cut spending in the future.
Well the market rally yesterday was based on the (unprecidented) statement that interests rates would remain low (i.e. pretty much at zero) for the next two years. Imagine how they’d rally if the EPA was cub stomped, the drilling moritorium was lifted and other regulations were EOed away?
LOL 🙂 So that’s the new excuse for Obama? He doesn’t put forth plans because he is such a super meta-leader? Maybe a Zen or Tao thing – leading by not leading? And it’s we who are too dumb to get it?
No, that depends on what is in the plan. Actually, in His statement the other day, He kind of sketched a plan. It was nothing good, just the same old crap: Have faith and raise taxes.
Oops, already going there. What we need is a plan to get it over with, then have a good *recovery* – high growth in production and trade, prosperity, job creation. Growth and prosperity, Cas – those things that neither you nor Obama understand, or really care for.
1) It’s actually leftists like you who push the “nation as family” metaphor, Cas, e.g., when you want to raise taxes. It’s part of the national socialism you espouse in the sphere of economics.
2) Having said that, yes, the federal government does have to live within its means – just like cities, States, businesses and individuals do. Are you seriously suggesting that it doesn’t?
FIFY. And wait – what about your starting point? Isn’t being reactive His strength now – showing His super meta-leadership?
I’d be willing to lay money that Hi Cas doesn’t have the slightest frakkin’ clue just how heavy the burden of regulation on business is in this country.
The bigger government gets, the less the economy is capable of growing: http://static.seekingalpha.com/uploads/2011/7/18/saupload_071511_02.jpg
Regulation compliance was recently estimated to cost the economy $1.75 trillion per year: http://pajamasmedia.com/blog/the-hidden-tax-regulation/?singlepage=true
The Cas/Obama solution to that: Keep increasing government. Insanity!
Economics in the real world have been shown to have a profound … near absolute… conservative bias.
So let’s summarize Hi Cas!’s economic worldview:
1) We need to cut government spending and raise taxes
2) We can’t cut government spending because it will cause a recession.
In short, the entire economy is supported by deficit spending, not by actual growth or value.
That is the definition of a bubble.
So Cas, for all its whining and screaming about the real estate bubble, wants to push the United States into a state in which ever-expanding Obama Party spending is only supported by ever-expanding Obama Party debt and ever-expanding Obama Party demands that the productive pay ever-expanding amounts.
And for what? So that parasites like Cas who choose not to work can have the same perks as those who do. Cas does not care about productivity or value; all Cas and the Obama Party care about are “entitlements”, which they think you should get whether you work and contribute or not.
The worse the economy is, the more people will be dependent on dems for food stamps, unemployment, medicare, etc. and all of these voters will vote him back in. He WANTS a bad economy and a weak dollar.
Medicaid, rather.
Ah, but you see NDT, if we just tax and spend and borrow and print and tax and spend *enough*, then those mysterious people who do somehow, magically create growth and value in the real economy, will be moved – either by their own wealth being continually drained, or by all the false activity whirring around them – into trying harder. That’s “the multiplier effect”.
I can’t think of a time when it’s worked – not without a true pro-growth measure coinciding, like tax cuts or deregulation or increased energy production – but this is not about facts or evidence, it’s about looting the rich. “The floggings will continue, until morale improves.”
Even if the economy took a hit from reduced Government spending, wouldn’t it be worth it in the long run to have a more robust economy and more sustainable levels of public spending?
The way I think of it: Since it is inevitable that the economy take a hit from reduced government spending (anything beyond 2005 levels being unsustainable), let’s get it the hell over with. And have economic freedoms in place (which we don’t, now) so that prudent and productive people will want to start new businesses, create new jobs, etc.
Hi ILC,
It is interesting that you read my post as defending Obama’s leadership qualities. I have no idea why. I don’t think he is a great leader, and he is a centrist (no matter what the right wing says). I think Progressives make a big mistake thinking he is progressive himself–I don’t see it. Obama will rely on the argument to “pick me, because I am not the Repub nominee.” Wow, what a great and inspirational message that is…
No, but a government’s means are very different from a family’s means. Having just embraced the family metaphor after complaining about me using it(!), I have to share that I think it is also an unhelpful metaphor, as it is constructed. The metaphor doesn’t get made with the family borrowing money to help pay for some productive asset, such as an education, or financing for a small business (and Obama is to blame for this as well); nope, its seen in the context of dad being hopelessly drunk, spending the money on the dogs at the track, running up the debt and…, well, you get the picture. I understand that the last part is closer to how you see events, ILC, but I see it more in the context of the former. A difference of opinion.
And as for taxing and spending, there is nothing magical about it… Its a question of timing tax hikes and spending increases, and it is also a question of multipliers, including the Balanced Budget Multiplier. Multiplier effects (as most economists understand them) are an implicit part of the basis for your own thinking–that virtuous circle” of increasing income caused by “right” investment and production of goods, spreading this increase in production and income throughout the economy.
In rereading your post, given the way that you define “multiplier effects” your post makes sense. It is just that that is not the way that most economists or textbooks would define it (nor I for that matter), so I guess we will have to end up agreeing to disagree on that issue as well.
Finally,
I agree with the growth and prosperity bit, but (irony alert), I believe that leading us into a recession will lower standards of living (at least on those who are and will be un- or under-employed, if not the wealthy), and I think that it is unnecessary to do that. I believe we can get back to “growth and prosperity” by following more mainstream prescriptions. We have a perfectly good explanation of what is going on from within a normal economic framework (I know, you don’t care for it, ILC, but I think it works), and for all you want to say about Krugman, he has been right about the big picture since this recession/fibrillating recovery started (again, I know many here, including you do not agree with that statement given your worldview). Again, we disagree.
We know that the Obama Stimulus cost $278,000 per job “created or saved.” To Hi Cas, this was a pretty good deal.
The metaphor doesn’t get made with the family borrowing money to help pay for some productive asset, such as an education, or financing for a small business (and Obama is to blame for this as well); nope, its seen in the context of dad being hopelessly drunk, spending the money on the dogs at the track, running up the debt and…, well, you get the picture.
Of course, when one considers what Cas and Barack Obama call “productive assets” or “investments”, it’s easy to see why.
And therein lies the difference. The Barack Obama Party, including its puppet Cas, scream and cry and whine about different tax rates for companies that employ hundreds of thousands of people and pump billions of dollars into the economy annually — but consider stopping the transfer of money from the people who actually work and earn it to drunks and adult babies to be terrorism, murder, and rebellion and demand that the Tea Party be banned from the airwaves and arrested for even suggesting such a thing.
You are a member of the parasite class and the parasite party, Cas. All you care about is increasing the number of parasites and the ease of access to the parasitic lifestyle. All your blathering here is about is rationalizing parasitism as a good thing.
And actually, Cas, Greece disproves Krugman’s theory, inasmuch as unlimited welfare spending, running up massive deficits, and encouraging and enabling a massive parasite class has done nothing but brought them economic ruin.
And before you start whining about the euro constraining their way to print themselves out of debt, you can look at Zimbabwe, which has the added example of having confiscation and redistribution of wealth and property as you advocate as a state law, not just through the taxation system.
For some reason, Cas, enabling and massively funding the parasite class, which is all Krugman’s theory is, does exactly squat for economies. Greece is full of public works that were built for the Olympics; however, due to parasite-class demands, untold billions were lost in kickbacks, “diversity” payouts, and everything else with which the government likes to saddle projects in order to purchase votes.
Effective government investment would be the government ordering everyone on welfare to show up at 8 AM tomorrow morning, handing them a shovel, and telling them to start filling potholes if they wanted their check. But as we see from welfare addicts like yourself, you want the money, but you won’t fill the pothole.
And don’t forget this epic stimulus investment, NDT.
And yet, to hear people like Cas tell it, the only Government waste is in the military.
High cas,
So since when has ObaMarx given a good f*ck what Fox or even the American people think? Can you think of ANY time he did so, sweetheart?
Hi NDT,
I don’t think the evidence points to the US being Greece or Zimbabwe for that matter. I know that some folks predicted hyperinflation, especially in 2010, but it didn’t happen then, and I don’t see the evidence of hyperinflation that you do. One precursor for that to happen id for a big run-up in labour costs to fuel it, and big premia on longer bonds, neither of which are happening. As for Greece, its part of the Euro zone, muxh more constrained in its economic choices than the US, etc, etc.
Hi TGC,
His whole performance during the debt ceiling debate was designed to paint himself as a reasonable voice in an unreasonable argument–to position himself for independents. So, yes he “cares” as a matter of political expediency.
The question is, would you rather have a Government that does a huge number of things, poorly, at enormous expense… or a Government that does a limited number of things, fairly well, at much a lower cost?
How dumb is Obama? On Monday:
He seems to think that unemployment benefits, especially super-lengthy unemployment benefits, create jobs. But they don’t. They are what you pay people who have lost jobs. And they give the people an incentive to not look for jobs, or to not accept anything that isn’t their dream job.
Looks like Congressional Republicans finally have a decent riposte:
But Obama’s stupidity continues:
First, it was Obama who used the threat of default as a bargaining chip. There was never an actual danger of default, because the U.S. takes in several times the tax revenue needed for debt service, each month. Obama chose to create a fake threat of default, a fake panic, as a bargaining chip in stampeding the Congress into tax increases. He should start by looking in the mirror. Oh wait, he does that all the time.
Second and regardless… It’s not the “threat of default” that caused the downgrade. It’s the spending. The endless, high-speed borrowing. The debt that was hardly $10 trillion when Obama got started with it, but now it’s $14.3 trillion, and it will be $16.5 trillion before Obama finishes his first term. That spending. That debt. That high-speed borrowing. That is what caused the downgrade, plus other forms of “enormous damage to our economy and the world’s”.
Cas/Obama may continue to inhabit a fantasy land where deficits don’t matter… but in the real world, numbers always win.
One precursor for that to happen id for a big run-up in labour costs to fuel it, and big premia on longer bonds, neither of which are happening.
Hyperinflation is created by degradation of the currency, which manifests itself in price runups in commodities and ultimately finished products.
Like oil and foodstuffs.
You can’t recognize it, Cas, because a) you’re looking in the wrong place and b) your religious beliefs insist that there are zero negative consequences to deliberate currency devaluation and degradation.