The elusive recovery

Sometimes things just don’t add up.

The White House just revised its budget deficit projection for the next 10 years upward by $2 trillion—about $7K more for every man, woman and child in the U.S. The economy is now projected to shrink 2.8% this year, 1.6% higher than the previous guess. Meanwhile, President Obama announced his attention to reappoint Ben Bernanke as Fed chairman, complimenting him for his “bold action” and “outside the box” thinking. The best argument you can make for Bernanke is that “things could have been worse” without the Fed’s massive intervention in the economy. This narrative is strikingly similar to Obama’s frequent lament that Bush left him a bigger mess than he realized when he took office.

While Washington is spending us into massive debt to stimulate growth, the economy just hasn’t responded as originally projected. As Al Gore would say, everything that should be up is down, and everything that should be down is up. Meanwhile, we are still talking about more government spending and control in the health care arena. And don’t forget cap-and-trade.

If you think you’ve seen this movie before, you’re right. Roosevelt tried to spend his way out of the Depression, but unemployment remained at 19% in 1938. As FDR’s Treasury Secretary Henry Morgenthau testified in 1939: “We are spending more money than we have ever spent before, and it does not work. … I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this administration we have just as much unemployment as when we started … and an enormous debt, to boot.”

Some resemblance of a recovery is likely, sooner or later. All of the money we are throwing at the economy is bound to spur enough activity to deliver some short term relief. But the current approach to the problem is akin to giving a heroin addict more of the drug so he can avoid the pain of withdrawal, without which he cannot begin to rebuild his life. Hopefully those who have been unable to learn the failures of Keynesian economics from history will now learn it from the current crisis.

If Obama thinks Bush left him with an economic mess, just wait until the next President has to clean up this one.

6 thoughts on “The elusive recovery

  1. Bush DID leave Obama a big mess. This IS Bush’s recession. If we don’t spend enough to get things moving again we’ll never turn things around. At least Obama is being honest about the problems and is doing something about it.

  2. Hey Saturn- You missed the point, all this spending only makes things worse. If Obama really wants to do something about it he can leave us alone.

  3. How many years will it take for saturn and friends to stop blaming Bush? Of course too much was spent during his terms, but Congress appropriates all spending. The Dems controlled Congress the last two years of the Bush administration, which is right when things started going off the rails. I’ll bet there were few if any spending bills that Obama voted against while in the Senate. The Dems control Congress now and if they so forcefully object to Bush’s policies, why are they doubling down on all of them with crazy, reckless, wasteful, pork-barrel spending?
    Do you know that if you pay down our soon to be $9 trillion debt by $1 million per day it would take over 24,000 years to pay it off?
    Why we repeat economic mistakes is beyond belief! It is the height of arrogance to think that Keynesian policies will work now when they never have before. Of course, you can count on one thing – when they don’t work this time, they will say that we haven’t spent enough.
    A depresssion in the early 20’s ended swiftly because the government did next to nothing and the markets and the people alone sorted it out in short order.

  4. Saturn, try to get your head around this…on economic policy you are not going to find many people on the right who endorsed the bailouts under Bush. Most objected then as they do now. See, when you have principles which are based in logic and historical precedent, you can be consistent, not ideological.

    By your logic, you should like Bush because he gave the bailouts.

  5. eh, doesnt matter as the “creeping socialism” will only continue….people today think they’re entitled to free health care (and free higher education) – and 50 years from now they’ll demand free housing, free food, free automobile, free EVERYTHING…..until it all collapses…

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