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July 08, 2009

"They're Between a Rock and a Hard Place:" Democrats Divided on Economy; Grim Unemployment Figures Suggest Need for Second Stimulus, But Their First Free-Spending Ineffectual Non-Stimulus Leaves the Nation Already Bankrupt

Which is why it was important, if it were to be done at all, to do it right the first time, and use the stimulus on real, genuine stimulus, such as cutting payroll taxes for a year.

As I argued back then:

For the cost of Obama's $1.2 trillion "stimulus," we could give employers a 2 1/2 year payroll tax holiday. Encouraging them to hire new workers by reducing their actual costs.

Over 2 1/2 years, that's 2.8 million new jobs, based on standard economic assumptions. Nevermind the additional jobs "preserved" (in Obama's weak promise) due to the fact it would now be cheaper to keep staff in place.

If this is all about jobs, jobs, jobs, and we want a sharp sudden impact for our dollars, why not consider this route?

Alternately... To mollify the public (Hey, why are my employers getting a tax cut and I'm not?!!), one could give employers and employees both a half reduction for 2 1/2 years. Or both a full, complete holiday for 1.25 years.

Numbers crunched by Flip.

Instead, we have taken the one bullet in our stimulus gun and fired it futilely into the air. We're out of ammo now.

Democrats own this abortion. There is absolutely no Republican influence here at all, save the Maine Twins' eleventh-hour fussing over a billion here or there. (The other Senatorial turncoat is now an official Democrat... until he loses in November.)

They ignored all advice. They were drunk with power and determined to indulge their nasty little ids and do harmful things just to prove they could do them, like poorly-raised teenagers misbehaving when their parents are called away on business.

"I won," Obama explained.

Yeah, you won. Past tense.

Democrats who control the levers of power in Washington are divided over whether to push for more deficit spending to end the recession and stem job losses, complicating the possibility of a second stimulus bill.

“We need to be open to whether or not we need further action,” House Majority Leader Steny Hoyer, a Maryland Democrat, told reporters yesterday. Senate Majority Leader Harry Reid of Nevada countered that “there is no showing to me that another stimulus is needed.”

President Barack Obama underscored the dilemma by addressing both sides of the argument. In an interview with ABC News yesterday, he said unemployment approaching 10 percent is something “we wrestle with constantly.” He added that spending more borrowed money is “potentially counterproductive.”

He then offered his opinion that Tastycakes Butterscotch Krumpets are "potentially delicious when soaked in milk."

The split reflects two major challenges facing the Democrats: Record budget deficits that make additional spending much tougher to pass and a 26-year-high unemployment rate of 9.5 percent that is expected to rise to double digits.

“They’re between a rock and a hard place,” said Stuart Rothenberg, editor of the Rothenberg Political Report in Washington.

The U.S. economy lost 467,000 jobs in June, exceeding economists’ forecasts, while the federal budget deficit is projected by the Congressional Budget Office to top $1.8 trillion this year and $1.4 trillion in fiscal 2010. That’s provoked criticism of the $787 billion stimulus bill passed in February as either wasteful or not large enough.

Enjoy the admission contained herein from big-wig Democratic advisor Laura Tyson:

The U.S. should consider drafting a second stimulus package focusing on infrastructure projects...

Wait, I thought the last one was focused laser-like on infrastructure projects? Apparently, not so much. Tyson concludes her thought nonsensically:

The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the bill approved in February was “a bit too small,” said Laura Tyson...

The last one didn't focus on infrastructute because it was "too small," or because Pelosi didn't focus it on infrastructure? "Too small" can only mean that infrastructure could not be properly addressed because the money was being spent on other things and infrastucture was not a priority.

Because, if the last one had been bigger, apparently we would have gotten around to those infractructure projects.

Here's some positive messaging for you:

...

The Obama administration may have to stick with that argument, as more spending is unlikely in the face of record deficits, said Stan Collender, a former House and Senate budget analyst.

“Adding additional spending or tax cuts right now would be very difficult,” Collender said. He added, however, that if the economy deteriorates, another bill to juice the economy may become possible.

“Right now it doesn’t seem to be justified,” said Collender, managing director of Qorvis Communications in Washington. “Come September, it might be.”

If the economy gets bad enough, he says, then what would in other circumstances be considered unthinkable becomes quite thinkable. A man who's doomed and dying anyway is less afraid of an extremely dangerous experimental surgery, isn't he?

And when is the patient looking like he might die? September, it seems.

More on this: Democrats frazzled as "stimulus" fizzles.

Five months after Congress approved a massive package of spending and tax cuts aimed at reviving an ailing economy, the jobless rate is still climbing and the White House is scrambling to reassure an anxious public that President Obama’s prescription for economic recovery is on the right track.

Yesterday, Obama took time out of his first presidential trip to Moscow to defend the $787 billion stimulus package, arguing that the measure was the right medicine at the right time. “There’s nothing that we would have done differently,” he told ABC News.

Stop the tape, as Rush says. His own Vice President admitted "We misread the economy." (Way to stay on-message, Joe!)

Bush was castigated for not admitting any errors about a war in which soldiers were (and still are) dying. Stubborn and self-serving, yes, but at least he had the pretext of not wishing to reduce morale to partially justify that.

What's Obama got justifying his refusal to admit error?

"There’s nothing that we would have done differently." Get that ready for 2010 campaign commercials.

Back in Washington, senior Democrats on Capitol Hill were nervously contemplating whether additional government stimulus spending may be needed to pull the nation out of the worst recession since the 1930s. Senior administration officials acknowledged that the effects of the stimulus package have been overshadowed by an unexpectedly sharp drop-off in employment since the measure passed in February. But they reported that only about $100 billion has so far been spent and that as increasingly large sums flow out of Washington, the program is on pace to save or create 600,000 jobs over the next 100 days.

Remember how the media always added "It has been x days since George Bush declared the end of major operations in Iraq" every time they ran a story about troops or Iraqi civilians dying?

If they are providing "context" like that, then they are required to provide "context" to Obama's claims of "saving or creating jobs," too. Like so:

There is no statistically sound basis to verify Obama's claims of "saving" jobs. Furthermore, no president in history has ever sought, nor was ever granted, credit for allegedly "saving" jobs in an economic downturn.

Utterly factual, too.

I'd add:

If such credit for "saved" jobs had been awarded previously, the doomed presidencies of Jimmy Carter and George H.W. Bush, often considered "failures," might have been rescued by such ill-defined and self-serving statistics. All presidents have previously been evaluated, in terms of job-creation performance, only according to the statistically rigorous and verifiable figures of jobs lost and jobs created. Until now there has been no suggestion from anyone of a third category, jobs "saved."

But then, I'm a partisan.

How's the market reacting to this talk of a second stimulus?

Ten week low in the markets. And they're our most commonly cited leading indicator of what the economy will look like six to nine months down the road.


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posted by Ace at 02:41 PM

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