Free Markets, Free People

Daily Archives: September 3, 2010


20 months after taking office, Obama considers tax breaks to stimulate economic growth

All sorts of things to talk about under that title.  So that calls for a bit of a ramble.

First and foremost, the title tells the story.  Why is it we’re 20 months into this administration and we’re just now considering tax breaks to stimulate the economy?  Note the word – considering.  According to POLITICO, there’s been no decision at all made on doing such a thing – if you thought the administration dithered about its strategy change in Afghanistan, this makes that look like a snap decision.

Let’s review:

Last November, Obama announced that he would turn his attention to unemployment, calling it "one of the great challenges that remains in our economy." He declared the same intent two months later, telling House Democrats he would focus relentlessly on job creation "over the next several months." Senior aides went on television pledging that the mantra would become "jobs, jobs, jobs."

But other matters – health care, the BP oil spill – continually stole the limelight, creating the impression, some Democrats complain, that the president was barely focused on the economy at all.

And now, “suddenly”, two months before an election, he’s “focused like a laser beam”.  A soft weak lit laser that sort of doesn’t do much but emit, well, words a bit of light.

I mean, read this explanation and tell me those who offered this as proof of his attention to the economy aren’t both tone deaf and just plain politically stupid:

His advisers described his attentiveness – noting, for example, that he discussed the economy with New York Mayor Michael R. Bloomberg (I) for 15 minutes before golfing – but got little traction.

Really? What in the freaking world has NY Mayor Michael Bloomberg got to do with anything to do with the economy. I mean, oh, goodie, he spent 15 minutes being "attentive" before they hit the links. That’ll fix everything. Oh, and what “traction” was he seeking?

In reality what happened was Obama was sold a bill of goods by his economic advisors about the effect of government stimulus.  Congress got a hold of the idea and larded it up with pork.  Result: spectacular FAIL.

They’re reduced to justifying the stimulus like this:

Many economists say Obama’s policies have been reasonably effective at pulling the nation back from recession. Last year’s stimulus package – now estimated to cost $814 billion – protected as many as 3.3 million jobs, according the independent Congressional Budget Office.

“Many” economists say his policies have been “reasonably effective” because some computer model says it may have “protected” – note the new word – “3.3 million jobs”?  Really?

Back to the “this ain’t rocket science” theme, but even if that’s true (and it’s very suspect) that’s about $250,000 deficit funded dollars per job.  And most of those, if I were to guess (oh, wait – “according to my model”) would be found in the non-productive government sector.  Result?  9.6% unemployment, no growth and no jobs.

So why, you ask at this late juncture, is he and his economic staff finally considering tax cuts?

Well, common sense says that the way to immediately impact spending and consumption is to give consumers more money with which to consume.  Make sense?  Yeah, it made sense 20 months ago too.  And there’s another reason that finally has seemed to penetrate their thinking:

All the talk about taxes—whether to raise them to address the deficit or cut them to stimulate the economy—may be having its own effect on growth. Allan Meltzer, an economics professor at Carnegie Mellon University, said the economy wouldn’t fully revive until Washington resolved uncertainty surrounding business costs, including taxes.

"Companies are cutting their expenditures and not hiring because they’re very uncertain" about these costs, he said.

Precisely.  Why in the world – as we’ve been saying for months here – would any business hire and expand in the face of this government made market uncertainty?

Meanwhile the political battle rages with the expected blame-game in full swing:

"Obviously it’s going to be hard to get anything done before the election, but it’s really important for him to try, and to make the case to the American people that he’s trying to do something and the Republicans aren’t letting him," said Steve Elmendorf, a Democratic strategist. "We are at the final moments here."

What the GOP isn’t “letting” them do is wildly throw another huge amount of money we don’t have at the problem.

David Axelrod piles on:

"We’ll continue to do everything we can, understanding that recovery will require persistent effort. There are no silver bullets," senior Obama adviser David Axelrod said in an interview Thursday. "At the same time, we have to make clear our ideas and theirs, and the fact that the Washington Republicans, having helped create this recession, have attempted to block our every effort to deal with it."

Yet the bar to passing any of this may not be “Washington Republicans”.  POLITICO reports:

But the administration will have a tough time selling nearly any package to some Democrats who increasingly blame the president and his ambitious legislative agenda for their own dismal prospects this November. And further states:

White House press secretary Robert Gibbs has repeatedly said the administration would go small-ball with any plans to boost the economy — and that the Democrat-controlled Congress had no appetite for costly, sweeping measures two months before what promises to be a difficult election cycle for the party. >

Emphasis mine, but you get the picture.  Democrats aren’t sure they want anything but if they do, whatever it is it has to work and work quickly.  Reality, however, is much more stark for the Democrats:

"Substantively, there is nothing they could do between now and Election Day that would have any measurable effect on the economy. Nothing," said the Brookings Institution’s William Galston, who was a domestic-policy adviser to President Bill Clinton.

Indeed.  As I continue to watch the economic three-ring circus this administration has created, I’m reminded of the words of one of my favorite funny men, Oliver Hardy: “Well, here’s another nice mess you’ve gotten [us] into."

Next up, the Three Stooges do ObamaCare.

~McQ


A phone call to Republican Air Conditioner Service Company

“Hello, Republican Air Conditioner Service. How can I help you?”

“Hey, my air conditioner is almost completely gone. It uses ridiculous amounts of electricity, hardly cools at all, has long pipes running through the yard to neighbor’s houses, and it sounds like it’s about to blow up. I need you to fix it.”

“Do you have a current repair company you’ve been working with?”

“Yeah. The incompetent boobs at Democratic Air Conditioner Repair. I called them two years ago and they promised to fix it. It was pretty bad off then because it’s been getting progressively worse for a long time. After paying them to fix it, and watching them scramble around doing stuff for two years, it’s worse.”

“Fine, just accept us as your repair company, and we’ll get right on it.”

“Yeah, well, I’ve heard that before. What exactly are you going to do to fix it?”

“Well, we’ll clean it up. It will be nice and shiny.”

“I don’t care about that. I want it to work.”

“Ah, but we are specialists in cleaning out a Culture of Corrosion. We think a nice, shiny air conditioner makes everyone feel better about how it’s working.”

“Listen, I don’t care. What are you going to do to make it work?”

“We’ll replace the other guys. You’ll see all new trucks in your driveway.”

“You’re not getting the point. What are you going to do to fix my air conditioner?”

“Well, that will take a lot of study. We might have to increase the power consumption so it works better.”

“What?!? The power consumption is already more than I can afford! And I don’t see how more power is going to keep it from blowing up. In fact, I think feeding in more power is more likely to make it blow up!”

“Yes, well, you are simply not acquainted with the rules of Keynesian electrical power consumption. Trust me, we’ve been doing this for decades.”

“Yeah, I know. My air conditioner has been getting worse the whole time. Why can’t you just work off the basic laws of electrical physics?”

“That’s way too complex to discuss. Besides, all the best people in the air conditioner industry have agreed that Keynesian electrical power consumption principles really work, so you don’t need to bother your head about it. The real issue is that you need to switch to us to take care of your air conditioner. After all, you certainly don’t want those other guys, after what you’ve been through, do you?”

“No. But I want somebody who’s going to fix my air conditioner. And there are no other repair companies in the whole state.”

“Of course not. Why would you need more than two? That gives you a choice. Isn’t that enough?”

“Not when neither choice can get the job done!”

“Oh, trust us. We should definitely be your air conditioner company. Are you ready to switch to us?”

“Will be you be sending the same people that came the last time I used your company?”

“Sure. They’re trained air conditioner repair people. You want experienced people, don’t you?”

“No! I want competent people! I want people who will fix the problem!”

“Well, that’s us!”

“You didn’t fix it the last time I called you. I gave you years to do it, and you just made it worse. You didn’t fix anything, but you did add on more pipes to neighbors’ houses and an air-filter thingy I didn’t want and don’t need. That’s why I switched to the other guys, hoping they could do something about the stuff you messed up.”

“And see what that got you! Those guys are just awful. They’re out of touch, and they’ll never be able to fix anything. Why, I hear they added a stereo and a set of speakers to your air conditioner. Don’t they deserve to be thrown out in favor of us?”

“Wait, I thought you guys were good pals. Don’t you play golf with them all the time?”

“Sure. They’re our colleagues. Plus, we often take over repair jobs from them, and we even use them for subcontracting sometimes. So we have to stay on good terms with them. Besides, we’ve known them a long time. We went to air conditioner school with them. Of course, they chose to go with the company that distributes Left of Left of Center Air Conditioners, while we distribute Right of Left of Center Air Conditioners.”

“Yeah, well what exactly did you learn in air conditioner school?”

“Oh, the usual. Telephone sales techniques, like I’m using with you right now. How to select the best polish to make the air conditioner shiny. Fundamentals of Keynesian electrical power. How to drive the truck that we use to get to your house.”

“But did you take any courses on HOW TO FIX AIR CONDITIONERS?!?”

“We took courses on how to WORK ON air conditioners. And how to keep working on them forever. Because they need constant tinkering you know.”

“No, they don’t! They just need to work!”

“You clearly don’t understand the purpose of air conditioners.”

“I though they were to keep my house cool.”

“Well, nominally, yes, but that’s a small part of their purpose. They’re supposed to do lots of other things too, such as pump cool air through long, uninsulated pipes to neighbors who can’t afford the electricity to cool their houses.”

“That’s going to be me soon! Assuming this thing doesn’t blow up before then and kill me in the process!”


Voters “for” GOP or “against” Democrats?

If Gallup is right about this poll, the GOP needs to understand much of the basis of its so-called” support, because it will be critical to their success in the next 2 years:

The Republicans’ lead in the congressional generic ballot over the past month may be due as much to voters’ rejecting the Democrats as embracing the Republicans. Among voters backing Republican candidates, 44% say their preference is "more a vote against the Democratic candidate," while 48% say it is "more a vote for the Republican candidate."

This is very important to understand, because, in my estimation, this is precisely the scenario that played out when Democrats took a majority in both houses of Congress and the Presidency.

Then the vote wasn’t so much a validation of the Democrats and their agenda as it was a rejection of all things Republican.  The majority of the nation was sick of Republicans and their agenda as much as anything.

In politics the pendulum swings.  Democrats were given a chance because the populace was unimpressed with what the GOP had done with its chance.  And, given the way the two parties have essentially ensured no real competition from a third party can ever really upset their chances, the only viable choice was Democrats.

It is one reason you see these “purges” within the parties going on influenced by the more radical elements of their movement – such as the Kossaks and “progressives” on the left, and the Tea Party on the right. 

In both cases, each movement has taken what is available and attempted to shape it in its own image (and focused on its own agenda).  This is a natural polarization driven by dissatisfaction with the status quo on both sides, obviously. 

As we’ve seen in the last 20 months, the “progressive” agenda has failed spectacularly.  Not in the amount and type of legislation they’ve managed to pass – when you have majorities like they had, it’s no surprise at all.  But in how the public has received those laws.  That’s because the left misread the election of 2008 as a mandate given by an electorate that they thought had embraced their “progressive” agenda.  As the polls tell us now, that wasn’t at all the case.  The proof of that is the mass movement of independents away from the Democrats and the rise of the Tea Parties.

The GOP faces the same dilemma.  It is going to win in November, but what is it going to win?  A mandate?  For what?  Answering those questions is akin to stepping through a minefield blindfolded.  What are Americans looking for in the coming Republican legislative wave?

If Republicans don’t have answers to that question and don’t realize that they’re getting as much the “anti-Democrat” vote as the “we want Republicans” vote, they’re in for a short tenure as a majority in the House.

Let me lay out a few things that I don’t think the people want:

1.  They don’t want endless partisan “investigations”.  I’ve seen reports that claim that one of the GOP priorities in the House will be all manner of these.  There are certainly instances where certain things should and must be investigated – but such investigations should be limited and also obviously issues in need of investigation.

2.  They don’t want just “no” as an answer to everything.  Look, there are definitely principled stands that must be taken concerning fiscal matter where the appropriate and only answer is “no”.  But there are plenty of things which need a “yes”.  Standing up and saying “no” to everything the administration advances only hands the Democrats a tool to use against the GOP in 2012.  The GOP must advance some sort of legislative agenda that is clear, limited and founded within the principles the party espouses about cutting spending, limiting government and being fiscally conservative.  Anything that the administration advances that fits these principles should be embraced.

3.  They don’t want endless politics.  I.e. the political theater.  My goodness, some of these people get more camera time than many Hollywood stars.  They need to shut up, do their job, and effectively tell their story at the appropriate time and in effective and generally understandable way.  They don’t have to have an opinion about everything everyday.  The more time they spend in front of a camera the more time they have to say something foolish and have that become the story of the day vs. discussions of issues that are actually important.  Take a break – enforce a little self-discipline – and stick with topics in which you may have some actual expertise.

If I read what I’m hearing and seeing out there, there is a sense among the general population that government – not just Democrats – has been headed in the wrong direction for quite some time.  If you follow the trends of the “is the country on the right track” polling, you know it hasn’t changed significantly since Democrats have taken power from the Republicans.

The conventional wisdom was that once the Democrats swept into power, all would be fine and we’d be on the right track.  That CW was, of course, pundit and media driven.  However the majority of Americans blew that out of the water fairly quickly.  But that finding supports the polling Gallup has above.  Republicans are going to get another chance because they’re the only viable choice left after voters kick out the Democrats – not because the voters are significantly in love with or necessarily excited about the GOP.

So, fair warning to Republicans – don’t misinterpret this coming vote as did Democrats in 2008.  It’s no mandate, it’s a “lesser of two evils” vote – unfortunately a common vote in all elections anymore.  Understand that and understand that the GOP is a getting another 2 year trial to see if they’ve learned their lessons.  Voters are angry, fearful and unsatisfied with the direction of the country.  Much of that is wrapped up in the size, scope and cost of government.  They understand that if they ran their household as the government runs its business, they’d be bankrupt, homeless and in the street.  They’re looking for some common sense in DC, a dial-back of the size and scope of government and budgets that reflect sanity, reduce the deficit and help unshackle their grandchildren from the financial slavery this present bunch is selling them into.

Do that and Republicans may get an extension in 2012 to continue their work.

~McQ

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