Columns & Analysis
Obama must hope for a 'rosy apocalypse'
Barack Obama spent all of 2008 running against the sputtering economy, and warned earlier this year of a crisis "we may not be able to reverse." Yet, as the unemployment rate climbs beyond the administration's projections, Vice President Joe Biden informs us that the administration "misread how bad the economy was."
Apparently we were going to experience a once-in-a-lifetime economic crisis comparable to the Great Depression without a particularly high unemployment rate. This was the promise of the Obama administration, which indulged in hair-raisingly alarmist economic rhetoric while pumping out unduly hopeful economic projections. If the Reagan administration gave us the rosy scenario, the Obama administration has given us the rosy apocalypse.
The rosy apocalypse is an artifact both of ideological naivete and knowing cynicism. The administration genuinely believed, against all historical experience, that government spending would boost us out of the recession. And it knew it had to assume an unrealistically rapid, robust economic recovery, because otherwise the already-horrid deficit projections would look worse. So Obama talked up the crisis to get the stimulus passed, and after that ... happy days again!
If only the job market were cooperating. In a report prior to the passage of the stimulus, the soon-to-be head of the Council of Economic Advisers, Christina Romer, suggested the unemployment rate wouldn't increase beyond 8 percent. It now stands at 9.5 percent and will go higher. The Obama stimulus is falling victim to the poor timing and inefficiencies of all such recession-fighting spending programs.
Out of the $787 billion of the stimulus, roughly 60 percent goes to individuals in temporary tax rebates and increased entitlement spending. This will provide little boost to the economy. History says that people will only spend 20 percent to 40 percent of a temporary tax rebate for the very good reason that they know it's temporary.
According to the Bureau of Economic Analysis, disposable personal income increased at a healthy 1.2 percent in April and 1.6 percent in May. Is this money coursing through the economy? No, it appears most of it is being saved. In April, personal consumption declined .10 percent, and in May it ticked up a mere .20 percent. Americans refuse to spend their money as heedlessly as Obama's economic gurus hope.
Then there is the direct government spending. It will definitely make its way into the economy. The question is when. It has to run through various bureaucracies, which means delay. According to Doug Elmendorf, the head of the Congressional Budget Office, only about half of the $308 billion in spending will make it out the door by the end of fiscal year 2010 (i.e., by next September). That's about $150 billion during the next year and a half in a $14 trillion economy — in other words, a trifling .70 percent of the economy during that period.
Only 11 percent of that spending will take place by the end of fiscal year 2009. Most economists think the economy will be growing by the end of this year, so ideally the stimulus would begin receding in 2010 rather than taking effect in earnest. According to Elmendorf, even by the end of fiscal 2011, only 72 percent of the spending will have occurred. That means more of the spending will come in fiscal 2012 and beyond than is happening this year during the recession.
And this stimulus was touted as timely and targeted? Confronted by the inadequacies of the current program, its advocates have a predictable solution — a new one. Since the worthiest projects were presumably already covered in the first stimulus, a second stimulus would have to fund even more marginal priorities, and it would get into the economy even later. In other words, it would replicate rather than rectify the failures of the first stimulus.
Obama is resisting a second stimulus so far, but was foolish ever to go down this route. Now he's stuck hoping for the advent of his rosy apocalypse — as soon as possible.
Rich Lowry is a syndicated columnist. He can be reached via e-mail at: comments.lowry@nationalreview.com.
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Are you for real Joe? Your
Are you for real Joe? Your rantings make no sense at all. Where do you buy your cars Joe? Is only foreign car dealerships on the up and up? Or any for that matter? There were people that had dealships in thier families for years taken away from them. It is obscene. To have the government shut you down, take away your livlihood and you blame Bush? You must remember that dealerships employ sales people and also men that service these cars. Your talking about a lot of families without jobs. Are you a heartless liberal? It seems to me that you are. I believe that Obama is a power grabbing dicktator and I mean that literally.
verified Car dealerships are a laying
Car dealerships are a laying ground for corruption and grifting off of others Barb I have seen the low level outside operations in telecommunications offices. Tell me Barb do you have any idea how many families were taken in by an easy car loan during the Bush administration and losing everything when the rate hikes hit? Bush was a good president, good ideals, good practices, and very, very poor advisers on his staff. What we have here is a failure to relate and find common ground during that. I admit my emotions do have me pushed but do believe that we are looking at a new age of finding road programs and groups. My emotions out of check; the honest answer is if they performed sales knowing rate hikes were coming they are just as much at fault, sloppy sales, poor reinforcements, and allowing rate hikes and percentages. I find it better to reform the commission markets of salesmen and bolster with 401k and stock investments for performing salesmen. That makes an economical sense others find fault with that but it cuts down on corruption, interests more talented salesmen, and brings in managers to understanding that they do not have to alter sales records and the percentages apply toward companies fostering staying in the public eye of honesty.
Joe Ziehm
Lewiston ME
There are two kinds of Republicans in this world moderate and conservative for so long I've picked the moderate that now it is time to consider the path less traveled.
If anyone is laying in a
If anyone is laying in a gutter right now you can blame your president. He has done nothing but cause more people to loose jobs. Just look at the car dealerships and how he put 250,000 men and women out on the street. Maybe one of those people are you you are refering to are the ones that are lying in the gutter. He took the livlihood of these people and stripped it from them. He could care less. He is greedy and power hungry. Maybe Obama should THINK for once before pushing his socialist adjenda? He knows NOTHING but is up for a power grab. Unemployment is up over 9.4% and this country is BROKE. Were are the JOBS that were supposed to come from this bailout? If there were jobs created then I doubt that unemployment would be over 9%. Does it take a rocket scientist to figure that out? Obama is like a junkie with ADHD. The government is taking control of energy, car companies and now health care. We must pass these quick quick quick. Don't read it or discuss it just do it and do it NOW and do it without thought. If you thought that Bush was stupid then Obama qualifies as an idiot. That is Obama's problem he doesn't take time to think. You ain't seen nothing yet as I am sure that before it's over with Obama will suceed in driving the unemployment figures over double digits. Just give him a couple of months.
verified The economy has not died yet
The economy has not died yet Barb remember FDR faced the same type but I guess its better for people to die face down in the gutter because it does not involve you. Is it better for people to die in a gutter Barb?
Joe Ziehm
Lewiston ME
There are two kinds of Republicans in this world moderate and conservative for so long I've picked the moderate that now it is time to consider the path less traveled.
This is for all the idiots
This is for all the idiots in congress who didn't read this bill then voted for this pig of a pork stimulus package. I guess spending your way out of debt doesn't work. Why are the libs silent on this issue? I guess Obama spent all our money and left us with the change. Change that we certainly have a hard time believing in. Obama lied and the economy died.
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verified on "P. Nachman: Confidence probably misplaced"
Ronald, If you have not
Ronald,
If you have not noticed, everything I’ve listed is a growth in the size of government, a growth in government spending or a program in crisis.
A tax cut does not belong in that list. While a tax cut may grow the size of the national debt, a tax cut does not necessarily grow the size of government nor does it increase spending.
Moreover, you selectively forgot to add your favorites, Bill Clinton and Obama, to your list of tax cutting presidents. Any reason why? Maybe your Cuban pharmacist is giving you placeboes!
verified on "G. Decoteau: They deserve each other"
I second
I second the motion!!!!
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verified on "P. Nachman: Confidence probably misplaced"
Not surprising
It is not surprising that the Czarist and racist factions of the old "Conservatively" Russian front are continually becoming seen all over again. The entire facets of hatred and fear seem to be predated in concepts from Stalin and Hitler himself. Using the vileness of the "outsider" as the most dangerous among us. Mr. Nachman you remind me of a classmate of mine who had felt that as she was of Czech descent that my mothers lineage of Irish-Jewry made it so that I would have to kneel before here.
As a Baptist this is rather disappointing to see that for all of the physics based knowledge one can posses creating an air of fear is the only true self-gratification one can get. In fact this is a bondage between those in the systems of your own family as well. The racism and the scaffolded humanist rejections with an air of continual fear is little more then self-centered egotistical facets. It seems to thrive on fear and donations to establish a "cult" mandated sense of the opine in writing and creates a narrow minded view of those who think differently.
Mr. Nachman while you enjoy the daily purges of illegal "aliens" does any of this truthfully set you so far apart from Stalin or Hitler? The very nature of the article which you write is more of instilling fear toward others; then little more then that? Is this a case where in reverse desperation anyone not deemed American would have to kneel down before you? The questions becomes of the VDare project just how much of a diaspora it would create and exiles as well if they had ever been given enough control to expel other Americans.
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