Strong opening statement explaining the problem and why stimulus will help. Best line: "Tax cuts alone can't solve our economic problems."Allow me to go long here a bit, because this is important. We just had a once-in-a-lifetime wipeout in the financial markets. If you talk to smart economists, off the record, you understand that the bursting of the real-estate bubble was not just a normal hump in the business cycle. It was more like the Mother Of All Corrections, a Drudge-siren alert that the fundamentals of our economy had gotten waaaay out of whack.
When the Good Times go away, there's no guarantee they'll ever come back. And if you've been reading Megan McArdle over the past year or so, you know that she has advanced the notion that top marginal rates are now sufficiently low that major Laffer Curve effects are not to be expected from further reductions. (Not sure I'm buying that argument, but it is worth considering.) So the question is not necessarily whether the Right is correct in saying that tax cuts will fix the economy or the Left is correct in saying that deficit spending will fix the economy. Rather, the question is, Can the economy be "fixed" at all?
That is to say, given all the economic realities -- including the graying of the workforce and the ballooning entitlement burden -- is there any government intervention that will automatically return us to the Good Times? I'm not entirely sure. There are textile-mill towns down home where the Good Times left and never came back. There are little towns all over rural America that have been shrinking toward ghost-town status for the past 15 or 20 years. Inner-city Detroit has never really recovered from the 1967 riots.
That a nation as large and wealthy as the United States might go down, never to rise again, is a remote possibility, but there is no guarantee we'll ever get back to the go-go heyday of 1987, when the Baby Boomers were age 23-41 and thus in their healthy prime working years. We have suffered a serious financial loss and, because of underlying structural problems in our economy, recovery will be difficult whatever the government does. But if government does the wrong thing, it's going to be much more difficult.
All this is to explain why we should be extremely pessimistic about the prospect of this massive neo-Keynesian intervention. Suppose a pipe-dream hypothetical: Somehow, this "stimulus" actually produces a sort of dead-cat bounce in the economy, so that unemployment is down around 5% again by 2012. Is that good? No, not really, because government will have produced that bounce by borrowing massively against the future in a society that's about to sustain a serious demographic shock.
The first Baby Boomers turn 65 in 2011, and every year after that will see more and more retirees going onto the Social Security and Medicare rolls. Even if we raise the retirement age, there is still the net drain of productive labor. The average 67-year-old can't produce goods and services as efficiently as the average 38-year-old and (due to certain legal decisions circa 1973) after 2011, we'll have a growing shortage of 38-year-olds and a growing surplus of 67-year-olds.
We are on the verge of a taxpayer shortage, you see, and what the Democrats want to do is take out a massive loan that will have to be repaid by a shrinking pool of taxpayers, who will be expected to support a burgeoning population of increasingly sickly Baby Boomer retirees.
So, even if all this deficit spending could purchase a dead-cat bounce -- and I am on record as saying it won't -- it cannot fix the underlying problems of our economy, which have nothing to do with "green energy" or other such nonsense programs run by the Department of Unicorns and Rainbows.
What we need, really, is a strong dose of Schumpeterian "creative destruction," and this neo-Keynesian approach is the exact opposite of that. No matter what government does, we may be doomed. But Obamanomics is like seeing a drowning man and tossing him a cinderblock instead of a life preserver.
Total bummer? Depends on your point of view. Back in 2003-06, when the economy was going gangbusters, you leftist bastards were all whining about "the growing gap between rich and poor." Well, congratulations: It's stopped growing, hasn't it?
If Obamanomics makes things worse (hello, "stagflation"!) then the advocates of social justice can do a happy dance because we'll all be more equal, and much, much poorer.
(Linked by Jules Crittenden, who gets the Instalanche for his Iran-blogging.)
(Linked by the Anchoress, who gives me waaaay too much credit for what was really just second-hand copyright infringement.)
(Ed Driscoll gives the linky-love, too.)
(Linked at Conservative Grapevine.)
(Linked at Maggie's Farm. BTW, I've updated this theme, with cute video.)
PREVIOUSLY: Malkin watches the Doomsayer-in-Chief's press conference so we don't have to:
"It is only government that can break the vicious cycle."Government is the vicious cycle, sir.UPDATE 9:21 p.m.: Back to his bogus "experts agree" argument:Sir, experts agree your ears are too big.UPDATE 8:55 p.m.: From his opening remarks:
I took a trip to Elkhart, Indiana today. Elkhart is a place that has lost jobs faster than anywhere else in America. In one year, the unemployment rate went from 4.7% to 15.3%. Companies that have sustained this community for years are shedding jobs at an alarming speed, and the people who’ve lost them have no idea what to do or who to turn to. They can’t pay their bills and they’ve stopped spending money. And because they’ve stopped spending money, more businesses have been forced to lay off more workers. Local TV stations have started running public service announcements that tell people where to find food banks, even as the food banks don’t have enough to meet the demand.Folks, ask yourself why Elkhart's economy is hurting so bad. Because their No. 1 industry there is -- wait for it -- RVs. Yup, big-ass fuel-guzzling RVs that get worse gas mileage than an M1 tank. If it were up to Al Gore, driving one of those things would be punishable by the death penalty, and when gas went up to $4 a gallon, the market wasn't exactly craving those behemoths. But by the time gas prices fell back to $1.69 a gallon, the real-estate market had tanked, and nobody had the the money to buy a $70,000 motor home.
Supply. Demand. Very simple. Nothing against the good people of Elkhart, but (a) Obama's plan ain't going to do jack for your local economy, and (b) if you end up on the wrong side of the supply/demand equation, that's not the fault of the American taxpayer, is it? Cry me a river. I spent 22 years in the newspaper business, and nobody's offering to bail me out.
UPDATE: Althouse liveblogged. Loved this part:
7:14: "That wasn't just some random number that I plucked out of.... uh" -- he's thinking: can't say my ass — "out of a hat."Allahpundit and AOSHQ are also blogging the press conference.Michelle Malkin was liveblogging the action on the Senate floor today:
[Sen. Susan] Collins laundry-lists all the spending and concludes again: "Our effort is bipartisan, targeted, and effective."Susan Collins (R-INO) would swallow a porcupine if you told her it was a "bipartisan compromise." Obama is scheduled to give a nationally televised press conference tonight at 8 p.m. ET, at which time he will tell us that we are doomed -- DOOMED! -- if this thing isn't passed immediately.
No: It's pork-laden, out-of-control, and irresponsible.