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The Damage of Obamanomics
Posted By Larry Elder On August 19, 2010 @ 12:08 am In FrontPage | 2 Comments
The position of chair of the Council of Economic Advisers is open. How President Barack Obama fills it can tell us whether he’s finally gone wobbly on Obamanomics — maybe in time to arrest some of the damage.
Would President Obama, to fill a Supreme Court vacancy, ponder whether to nominate liberal Ruth Bader Ginsburg or conservative Antonin Scalia? Would his finalists come down to Sonia Sotomayor or Samuel Alito? Elena Kagan or John Roberts?
Laughable, of course.
Such a range of choices would mean that the left-wing Obama does not know whether he wants a “constitutionalist” or a proponent of the “living, breathing document” school of jurisprudence — whether he wants a “strict constructionist” or whether he wants a jurist who decides cases based, as he put it, on “empathy.”
We know where he stands. And it is not on the side of Clarence Thomas.
Now, for the chair of the CEA, would Obama’s list of possibilities include both the Obama-sympathetic left-wing economist Paul Krugman and supply-side economist Lawrence Kudlow?
Don’t laugh. A Washington Post columnist actually suggested that Obama consider these two polar opposites. Honestly, Kudlow? To paraphrase press secretary Robert Gibbs, somebody needs drug testing.
Kudlow, a former member of the Reagan administration and current CNBC host and syndicated columnist, advocates lower taxes, free trade, smaller government and less regulation. Krugman, a Princeton professor and New York Times columnist, wants more “stimulus” spending and called the first package “too small and too cautious.” They’re as different as George Patton and John Lennon.
Obama wouldn’t hire Kudlow to caddie his golf clubs, let alone to lead his team of economic advisers.
Obama is a community organizer, a person who, by definition, wants government to do more, not less. Obama rails against the “greed” of capitalism and believes that “at a certain point, you’ve made enough money.” He urges higher taxes on the rich to “spread the wealth.” He admits that higher capital gains taxes actually produce less revenue but supports a hike so that the rich pay a higher percentage — a matter of “fairness.” He doesn’t understand that government subsidization of the housing market — through Fannie Mae, Freddie Mac, the Federal Housing Administration and the Community Reinvestment Act — sparked the unsustainable run-up in home prices. He ignores the consensus among economists and says, “The American dream … means that we raise the minimum wage not just every 10 years, but all the time.”
This is not a man who plans to get in touch with his inner Milton Friedman.
“I was wrong,” Obama would say by selecting Kudlow.
“Unemployment is near 10 percent. It remains high despite the passage of several stimulus packages predicted to jump-start the economy, several extensions of unemployment benefits, takeovers of two domestic automakers, and bailouts of banks and other financial institutions. We are now going in a new direction.”
The outgoing CEA chair, Christina Romer, pushed for the $787 billion stimulus and predicted that its passage would prevent unemployment from reaching 8 percent. When unemployment busted past that level, Romer reportedly lost power and influence.
Was she ever comfortable? When Obama chose her, some thought it a sign that Obama wanted to govern as an economic moderate. A San Francisco newspaper called Romer “decidedly centrist.” OK, that’s San Francisco. But she and her economist husband wrote a paper in which they sounded like Ronald Reagan: “Tax increases are highly contractionary. … Tax cuts have very large and persistent positive output effects.” But Obama believes President George W. Bush wrongly gave tax cuts to the rich, who “didn’t need them and didn’t even ask for them.”
“Every economist who’s looked at it,” said President Obama, “says that the Recovery Act has done its job.” This is true — except for all the economists who think it failed.
Stanford economist Michael Boskin says, “The permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times.” Heritage Foundation economist J.D. Foster says, “The problem with the idea of pump-priming the economy through deficit spending is that the government must first pump money out of the economy by borrowing it. Government spending increases public demand; government borrowing reduces private demand. Governments don’t create purchasing power. They destroy it through inflation or transfer it through borrowing and spending.”
What about Krugman? The Post columnist writes, apparently with a straight face: “Krugman is best known for his New York Times columns arguing that the $787 billion, debt-busting stimulus bill was not enough. … Maybe it’s time for Krugman to put his money where his mouth is. You think government needs to spend more to get us out of this funk? Okay, Paul. Here’s the key to the car.”
No, we’ve been driving that car for nearly two years. Voters elected a dangerous left-winger who trusts government to run health care, car companies, banks and the student loan program.
The driver-in-chief not only sees no need for a course correction, he wants to step on the gas.
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