It’s official: the New York Times’ resident Nobel Prize Laureate/Loony is delusional. He wrote on his blog Monday about “how right he was”:
We’re coming up on the second anniversary of my piece “Myths of Austerity“, in which I tried to knock down the simply insane conventional wisdom then gelling among Very Serious People. Intellectually it was, I think I can say without false modesty, a huge win; I (and those of like mind) have been right about everything.
But I had no success in deflecting the terrible wrong turn in policy. Moreover, as far as I can tell none of the people responsible for that wrong turn has paid any price, not even in reputation; they’re still regarded as Very Serious, treated with great deference. And the political tendency behind that terrible economic analysis has at least a 50% chance of triumphing in America.
“Oh well” is right.
His first problem is that he says he has “been right about everything.” When one looks at the stimulus programs that have been enacted since this recession began, and the high unemployment that has persisted, the evidence is blatantly clear: Krugman is an idiot.
His second problem is his statement that “I had no success in deflecting the terrible wrong turn in policy.” Um, lest I am living on a different worldline than Krugman, the man’s main policy prescription has been stimulus, and we’ve had a lot of it:
As Congress debates the extension of the payroll tax cut, a measure that the White House said would stimulate the economy and create jobs, I offered my own thoughts on alternatives that would encourage economic growth and protect Social Security.
Topping the list of unfinished business this year is the impending collision of two closely related crises: the expiration of the payroll tax cut and the acceleration of Social Security’s bankruptcy.
Last year, Congress voted for a payroll tax cut that averages roughly $1,000 for every working family in America.
As warned, it failed to stimulate economic growth and it accelerated the collapse of the Social Security system. But as promised, it threw every working family a vital lifeline in tough economic times.
We need to meet three conflicting objectives: we need to continue the payroll tax cut; we need to stimulate real economic growth and we need to avoid doing further damage to the Social Security system.
But first, we need to understand that not all tax cuts stimulate lasting economic growth. Cutting marginal tax rates does so because this changes the incentives that individuals respond to. Cutting infra-marginal tax rates - such as the payroll tax - does not.
Before Democrats, the Obama Administration, liberals, and progressives start crowing about the updated unemployment figures—which the Bureau of Labor Statistics say is now down to 8.6%—there’s something you should know about the why it is down—and it’s not pretty.
The BLS divides up the unemployment numbers into six figures, U-1 through U-6. U-3 is the “official” number, the one that’s always toted on the primetime news channels. U-6, however, is the real unemployment figure, which counts marginally attached workers (those that have stopped looking for work for the time being) and underemployed workers (those working part time but want full time work), among others. And the worst part is?
Even that is rosy compared to the “real truth.”
The truth comes in near the middle of the Bureau’s press release:
In November, the number of job losers and persons who completed temporary jobs declined by 432,000 to 7.6 million. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.7 million and accounted for 43.0 percent of the unemployed. (See tables A-11 and A-12.)
The civilian labor force participation rate declined by 0.2 percentage point to 64.0 percent. The employment-population ratio, at 58.5 percent, changed little.(See table A-1.)
For several years now there has been an ongoing debate regarding the impetus for President Obama’s economic policies. Were they the work of the smartest president in history, a man so intelligent that his wisdom could supplant the collective experience and choices of 300 million Americans, and in so doing restore our economy? Were they the well-intentioned but errant contemplations on an Ivy League egghead with lots of “book learnin’”, but without a shred of private sector experience that is the proving grounds for such ideas, being exposed to the unmerciful judgment of markets?
At this point I have come to the conclusion that it is an intentional effort to replace America’s free-enterprise system with a democratic-socialist style, centrally-planned, government run economy. Look at the evidence…the massive stimulus package which failed spectacularly, the auto union bailouts, government employee bailouts, Cash for Clunkers, Son of Stimulus, and myriad other economic “remedies”. Combine this with calls for increased taxes of “the rich”, more regulation and more government intervention in the market, and we end up with a long-term stagnant economy. One can no longer chalk it up to pure stupidity. If it were pure stupidity then the law of probabilities would dictate that Obama would have made the right decisions, even if only by accident, somewhat approaching fifty percent of the time.
President Obama claimed last night that his jobs plan would be paid for. “Everything in this bill will be paid for. Everything,” he said. In politics, it never gets more clear than that. Of course, obviously I question it. I question everything any politicians says. What surprised me was that even the Associated Press is questioning it.
THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future – the “out years,” in legislative jargon – but they did not specify what would be cut or what revenues they would use.
Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.
Thank you AP.
For the record, this is the same problem one runs into when talking about spending cuts. Most of those cuts are deferred to the out years to ease the pinch in the short term, and most never materialize because, as the AP points out, Congress can’t tell a future Congress what they have to spend.
Regardless of what you think of the President’s jobs plan, his claim it will be paid for is dubious at best. As the AP piece points out, Obama must send his proposal to the Super Committee – which he does not control – and hope they accept it, then get it through Congress and then hope that these proposals are adhered to in the future.
We can only hope the president will have time to preview this video before his address — but really, would it matter?
Video produced by Caleb Brown, host of the Cato Daily Podcast, and Austin Bragg.
As August 2nd approaches, stipulated by Treasury Secretary and tax cheat Timothy Geithner as the date when the U.S. will reach its statutory debt limit, our illustrious president, Barack Obama, becomes more and more unhinged. From highly partisan, contemptuous and fact-challenged press conferences, to his angry and petulant exit from a meeting with Republicans on the issue, it is clear that Obama is feeling the pressure. This is compounded by the fact that the historically weak-willed Republicans seem shockingly willing to be proven vertebrates, and actually refuse to back down on principle (Senate Minority Leader Mitch McConnell’s recent suggestion to completely abdicate constitutional duty and give all power to the president notwithstanding).
From class warfare rhetoric about tax breaks for corporate jet owners (signed into law by Obama in the 2009 stimulus bill, and less than a rounding error on the federal budget) to fear mongering the elderly to think Social Security checks will not go out, nothing is beneath this integrity-challenged president in his quest for power. He tirelessly repeats his Marxist mantra of needing to get “millionaires and billionaires” to “pay their fair share” and be a part of the “shared sacrifice”, despite the fact that the top 1% of all income earners (a group starting at $380,354/year and including millions of small businesses that file taxes under personal returns…hardly millionaires and billionaires) paid 38% of total tax revenue, while the bottom 50% paid only 2.7%. The top 5% starts at $159,619 and accounts for 58.7% of taxes paid.
Shortly after the 2008 presidential election, historian Michael Bechloss gushed with praise for President-Elect Barack Obama, declaring him to be “probably the smartest guy ever to become President”, and raving that his IQ is “off the charts”. When interviewer Don Imus inquired as to what Obama’s IQ is, Bechloss admitted that he did not know, but that did not keep him from gushing effusive praise. We are left to take a historian’s word for it, because Obama has steadfastly refused to release his college transcripts, and his policies while in office certainly do not lend credence to the claims of his brilliance. In fact, if we had to judge the president by the effectiveness of his policies, Obama would be the functional equivalent not of the class valedictorian, but of that weird kid that sat in the corner and ate paste while talking to himself.
On matters of the economy, the president and his advisors seem to be particularly clueless. Consider some statements from the administration of late:
In a recent video clip making the rounds, Obama responds to a question about the near $1 trillion “stimulus” package and its effect on the economy by laughing and then declaring “ ‘Shovel-ready’ was not as shovel-ready as we expected.” This is, you will recall, the same stimulus package that Obama demanded must be passed immediately if we were to stem the possibility of another Great Depression. We were promised (by Christina Romer, the first chairman of Obama’s Council of Economic Advisors) that if we passed it, unemployment would stay below 8%. Well, we DID pass it, and we have been rewarded with unemployment levels between 9-10+% for well over two years. Now, we have high unemployment AND staggering quantities of additional debt crippling the economy.
I have to disagree with Dave Weigel here. He wrote on Friday in Slate that the stimulus bill really didn’t fail, although everyone is saying it is:
Veterans of the stimulus wars talk about it that way—as a war. They lost. The implication of the loss is that Keynesian economics are, arguably, as discredited with voters as neoconservative theories were discredited when the invasion of Iraq failed to turn its neighbors into vibrant democracies, highways clogged with female drivers.
This week, we got a concrete example of what it meant to lose. The Weekly Standard published a back-of-the-cocktail-napkin analysis of the seventh quarterly report on the stimulus, stipulating that every job created by its spending has cost $278,000. Republicans, who’d previously said the stimulus created no jobs, immediately started repeating the $278,000 figure. They kept doing it even after the magazine followed up, suggesting that the cost-per-job could have been as low as $185,000. $278,000, $185,000. $0.00? It didn’t really matter, because the White House and liberal response was perfunctory. As the stimulus winds down, with most of the money spent, everyone knows that it failed.
No doubt all of us would take some good economic news right now, but that won’t come from the jobs report for June, which was released this morning showing the unemployment rate rising slightly to 9.2% and adding only 18,000 jobs:
U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.
Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists’ expectations for a 90,000 rise.
Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.
The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.
Numbers from the two previous months were revised down by 44,000 jobs; April dropped from 232,000 to 217,000 and May from 54,000 to 25,000. In case you’re wondering, the economy needs to create around 120,000 jobs each just to keep up with population growth.
Another bad sign is the U-6 rate, what many economists call the “real unemployment rate,” jumped from 15.8% to 16.2%.
Just like government intervention in the economy in the 1930s prolonged the Great Depression, intervention and uncertainty with President Barack Obama’s economic policies are slowing the pace of recovery today.