Thursday, May 31, 2012

US: President Obama’s Frenzied Spending Caused A Feeble Recovery

US: President Obama’s Frenzied Spending Caused A Feeble Recovery – by Ralph Benko

Would you happily sign an IOU for $126,000 to allow Barack Obama to keep his Big Spender status going?  In some ways, that’s the bottom line on how people are going to vote on November 6th.  That’s what the nonpartisan Congressional Budget Office estimates Obama’s proposed deficits, from 2011 through 2020, will add to a family of four’s share of America’s liabilities.

What do you get in return for a tab of that size?  According to Grover Norquist and John Lott, Jr.’s new book, Debacle, you get higher unemployment, reduced economic growth and depressed housing prices.
Norquist is widely — even, in a backhanded way, by Mr. Obama — considered one of Washington’s most effective advocates for limited government.  Lott is an influential scholar who repeatedly has shown more interest in determining what effect policies really have than in doctrine and dogma.   His statistical analyses tend to the rigorous, elegant and counterintuitive.
Lott and Norquist recently trained their sights on the claims of the Big Spenders of Washington.  The Big Spenders, like any addicts, are always ready to provide facile rationalizations for their maladaptive behavior.  In the case of the U.S. economy, of course, the Big Spender claim is that matters would be much worse but for Obama’s spending frenzy.  Extremist commentators such as Paul Krugman insist that the spending was not frenzied enough.  This is, of course, a nonfalsifiable, unverifiable, brazen claim!
Is there any evidence for their claims?  Norquist and Lott drill down into the data from the real world rather than consulting an Oracle composed of thebon mots of Lord Keynes (or even Milton Friedman).  The evidence they found shows we are experiencing the worst recovery ever recorded.   “Astoundingly, the unemployment rate during the 29 months of recovery averages three full percentage points higher than the average unemployment rate during the recession.”
Previous U.S. recessions ended faster … and the economic growth of the ensuing recoveries were much higher … in eras without a spending frenzy.  If history is any guide Obama’s claims for Big Spending are unfounded — and destructive.
Maybe … that was then and this is now?  But our geographically, culturally and politically closest neighbor Canada did not engage in a comparable spending frenzy during this very recession and, in fact, cut corporate tax rates. “By October 2011 … Sixty-three percent of Canadians were then viewing their economy as ‘in good or very good shape.’  For Americans, only 9 percent viewed theirs as ‘good or excellent.’”  Similar conclusions about the toxicity of the spending frenzy on job creation can be drawn from the experiences of France and Germany in and after the Great Recession.
Maybe … that was there and this is here?  So … how did the states that got the most stimulus money fare compared to the states that received the least? “The Stimulus didn’t create more jobs in the states that got more money.  This is a very important result.”
Norquist and Lott meticulously document the lack of evidence for Obama’s claims that hyperspending programs helped, then or now, here or there, or even simply here.  They adduce massive evidence that Obama’s spending frenzy retarded the recovery.
They are not the only ones.  As my colleague Charles Kadlec wrote, “Remember …  how the President last fall demanded House Republicans pass ‘now’ $400 billion in new stimulus spending, relabeled a ‘jobs bill,’ or be held accountable for the coming slow-down in economic growth?
“Well, here is what putting a stop to Obamanomics has produced: The strongest six months of employment growth since the President took office.”
Debacle is no ordinary indictment.  It even might be rattling Obama himself.Rolling Stone recently ran a very (speaking as a regular reader and admirer, perhaps excessively) affectionate Oval Office interview which asked “Is there any way to break through that obstructionism by Republicans?”
Obama responds:
“My hope is that if … they suffer some losses in this next election, that … [t]hey might say to themselves, ‘You know what, we’ve lost our way here.  We need to refocus on trying to get things done for the American people. Frankly, I know that there are good, decent Republicans on Capitol Hill who, in a different environment, would welcome the capacity to work with me.  But right now, in an atmosphere which folks like Rush Limbaugh and Grover Norquist are defining what it means to be a true conservative, they are lying low.”
So… Norquist is defining what it means to be a true conservative?  Has Obama read Debacle?  Unlikely … but not impossible.  As for defining what it means to be a true conservative, all conservatives oppose Big Government.  Using Obama’s favorite rhetorical flourish “everybody knows” — the government will spend every penny it can get its hands on to get bigger.
Big Spending increases the power of officials and makes them feel like bigshots.  They will spend all they can, always with facile rationalizations.  Hence it is an imperative — for prosperity and liberty — to keep avaricious and sanctimonious officials from getting their hands on our money.  Norquist is a first line of defense and they find our resistance to handing over our wallets galling.
There are three main ways the government can get its hands on money hard-earned by us mere workers and savers:  taxing, borrowing, and printing.  Norquist is the prime mover in getting candidates and elected officials to solemnly swear not to raise tax rates or to close loopholes except to lower tax rates.  The ATR Pledge is ironclad and Newsweek’sJonathan Alter observed, “It has transformed American politics.”  The Pledge has proved so effective at fighting government avarice that in a recent personal conversation with Norquist this columnist urged him to convert it into a federal Constitutional Amendment.
Obama’s self-righteousness, irrespective of the painful consequences of his mistakes on the lives of working people and the unemployed, is reminiscent of that of Herbert Hoover.  Hoover fought the Great Depression with public works projects, raising taxes on the affluent (bringing the top rate up from 25% to 63%), raising corporate taxes, and, of course, badly neglecting monetary reform.  Hoover’s crazed policies made matters worse. Because Obama worships at Hoover’s Big Government altar, Hoover’s failures are not getting through to Obama.
Debacle’s most compelling moment may not be in the rigorously analyzed data but rather a telling personal incident.  Lott:
“When I was first introduced to Obama (when both worked at the University of Chicago Law School, where Lott was famous for his analysis of firearms possession), he said, ‘Oh, you’re the gun guy.’
“I responded: ‘Yes, I guess so.’
“’I don’t believe that people should own guns,’ Obama replied.
“I then replied that it might be fun to have lunch and talk about that statement some time.
“He simply grimaced and turned away. …
“Unlike other liberal academics who usually enjoyed discussing opposing ideas, Obama showed disdain.”
The evidence is becoming irrefutable. Obama does not govern based on results.  He is curiously, disdainfully, incurious as to what works in practice.   He shows disdain, which is nothing but a refined form of dogmatism and arrogance. Obama governs not for hope and change, but from disdain.  And that’s a recipe for … a Debacle.

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