Jay Carney said on Monday that the President will “continue to search for new ideas”, related to the economy.
Jay, Mr. President, there are no ‘new’ ideas. There are mainstream Conservative ideas and the same holds true for the Liberal point of view. They both have a history. Granted, the historical record is twisted by the ideology inherent in the interpretation but ideology does not change the numbers or the facts.
The New Deal failed resulting in an extended depression with FDR’s key advisor Harry Hopkins delivering the final analysis of the failure. The Great Society failed, creating unintended consequences that still haunt us today. The Carter economic program was disastrous. All of these approaches elevated government spending and intervention in a Keynesian and Neo-Keynesian context. Larry Summers, the President’s initial go to economic guru argues, recently, for a new infusion of government spending. Mr. Summers argues for more of the same; no new ideas. Why? According to Mr. Summers; we should increase spending because government borrowing costs are low. Continue with more of the same, notwithstanding the fact that by 2015 U.S. debt is projected to equal 100% of GDP. That’s not too far off from the ratio that is sinking Greece and will soon sink Italy, Portugal and Spain.
Borrowing costs are low because U.S. public debt is, currently, the lesser of evils. European debt is a better return on paper with the caveat that European economies don’t collapse. Recent Treasury auctions were well subscribed for no other reason than other options represent significantly greater risk. The economic comparative is simple, some return at low risk is better than losing it all to default.
On the Conservative side it’s a case of lower tax rates, a broader tax base, market based economics, and reductions in government intervention resulting in more resources in the hands of consumers and businesses. That approach worked with dramatic results under Presidents, Kennedy, Regan and Bush. Bill Clinton married the two approaches with some success albeit some of that success was a mirage, as critical segments crashed resulting in a recession towards the end of his term.
There are no new Liberal or Conservative economic ideas except on the fringes. The President is not looking for new ideas; he’s looking for new Public Relations. He’s looking for a new theme that will overcome the realities of his economic program. He’s looking for a way to convince us that somehow attacking the major underpinnings of the economy will result in a more vibrant economy. It has never happened before, it will not happen this time.
EPA is our best example. EPA wants oil and coal to achieve the same air quality standards as natural gas. It may be possible but as the President has said in the past the cost of meeting such standards will shut down those industries and eliminate growth. The President was correct and the intent, by way of Ms. Jackson at the EPA is consistent to the President’s message in 2008. Wait, wait there’s a new idea, eliminate a significant driver of economic activity and employment; drive it into the ground and wait for the positive economic impact. Economics should have a logical basis; these ideas simply do not satisfy any common sense standard for a nation already importing too much energy.
There are no new ideas. But there are some old ones that would result in dramatic impact, if not in the numbers short term in the physiology of the market place: eliminating high tax rates on the return of foreign profits, tax reform that simplifies the tax code and eliminates special interest provisions. The President could order the EPA to back off. He could press the Senate to take up the 16 employment related bills passed by the House. He could suspend new regulations for the remainder of his term. He could present a plan to eliminate the absolutely nightmarish scope of economic decisions he has delayed until after the election to a Lame Duck Congress. He could propose an economic plan that is not political, replacing his Jobs Act with a logical alternative; In short he could demonstrate some actual non-ideological leadership on economic issues.
Stimulus can come in many forms. In the Liberal view it has to be tax payer money married with central planning. However, eliminating the tax rates on returned off shore profits could result in a stimulus two to three times larger than the President’s original stimulus plan with no tax payer money involved. One must ask why not?
IBD reports that the share of Americans, out of work for extended periods of time is at its highest level since the Great Depression, 42% of the unemployed. New Business start ups are at its lowest level in history. Poverty statistics for Hispanics and Blacks are at 28% and 25% respectively. One in seven Americans is on Food Stamps. Spending as a percentage of GDP is the highest since WWII. The list of ‘worst ever’ or ‘first ever’ negative economic indicators continues to grow.
There are no new ideas! There are, however, ideas that have worked in the past but remain inconsistent to the President’s ideological view. No lesser a Liberal light than Maureen Dowd in the New York Times has harped on the President’s inability to see what has not worked. She’s late to the party but she’s right. The President isn’t late to the party; he does not even know there is one. To correct an aberrant behavior one must first recognize the error and impact inherent in that behavior. We have no signal, no hint that the President has come to that particular epiphany. It will, in the end, be the end of him with a wide swath of victims in its wake.