Strengthening Constitutional Self-Government

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Stelzer on the Economy

It really is getting better. It’s even true that some credit rightly goes to the stimulus package. The president has a decent economic story to tell, although his health care "narrative" is pretty darn discredited. So his most prudent course would be to scale back his health care ambitions for now and try to produce bigger Democratic margins in 2010 as Dr. Fix It on the economy. Stelzer adds some cautionary notes, including the undeniable fact that eventually we get bitten hard by the mega-debt. But who can be against the economy continuing to improve for a while, and who can be against the president backing off health care for a while, at least until people can actually read the whole plan, get a decent executive summary, and have a real national discussion about it? Most of all, the president needs some to figure out what he really wants and honestly make some hard and unpopular choices.

Discussions - 17 Comments

So, how long do I have, doctor? How long have we got until the massive deficits hurt us? Note, I expect we are tough enough not to die from choking on our current goodies package. I really am wondering about the future and not being as silly as all that.

While private citizens and businesses cannot avoid dealing with debts, can can the US government get away with it? I know we are talking about taxing the rich, again, but that won't bring in nearly enough money and will hurt in the long run, which even most Democrats know. Does anyone have information on how we are financing the stimulus? I hear about bits, but have no picture. Although picture a couple-a-trillion dollar national debt may be beyond my scope, anyway.

As an aside, I don't see Obama backing away from the health care issue. I know he said it is not about him, but it really is about him and his promises and his whole vision for changing America. Where is he going to back away to? I don't see a fall-back position for him or for Congress.

Kate, did you ask these questions when Reagan tripled the debt, and generated our first trillion dollar debts in 1988? Or when Cheney infamously said "Reagan proved deficits don't matter"? It is hard to take conservative debt-hysteria seriously. This town hall stuff is just an extension of Limbaugh's 'operation chaos.'

Some points,

1. James and Cheney are probably right about the political impact of deficits in the short term (as in by 2012). One can imagine a scenario where the debt and debt service become so big that it forces popularity destroying policies (unpopular spending cuts, massive middle-class tax increases, hyperinflation, or some combination) but that probably won't be Obama's problem for the remainder of his first term. Though it might become a problem for the rest of us for the remainder of our lives.

2. Even if the recovery is tentative, the economy will probably mend at least somewhat. The Republicans better have a story to tell about how they can broadly improve living standards under the conditions of a real but probably not-very-strong recovery. Especially since Obama will be taking credit for himself and his spending programs for every dribble of good news. Its going to be a tought sell, but not an impossible one. Probably.

3. I think that every bit of good news on the economy helps Obama in passing government-run healthcare. To the extent that the public feels like he lived up to his promises to aid the economy, they will be more likely to give him the benefit of the doubt on other promises too. The same is true to the extent that critiques of the healthcare bill sound similar to critiques of the stimulus ("you haven't read the bill, you're rushing it throught").

4. The last thing that Obama wants is for people to read the bill and deal with the real tough choices of his agenda. He wants to institutionalize the changes first, and when people are dependent on the new system, and the alternatives have been destroyed, drop the negative parts on them. The healthcare plan passes this year, the private market for the middle and working-classes is destroyed gradually over a period of years, and then when people are dependent on the system, they get end-of-life counseling ("take a pain pill")when they thought they would get treatment. There being no affordable private insurance market, most people will be stuck in the government system regardless of its flaws.

did you ask these questions when Reagan tripled the debt

Presidents do not "triple the debt". Congess does though. It would be helpful if the people commenting on political blogs had some basic knowledge of our system of government.

It really is getting better.

It's not. The rate at which things are getting worse has slowed, which is a very different matter.

It's hard to take liberal debt hysteria seriously. Obama is taking 8 months to match Bush's 8 years of debt.

And Reagan implemented his plan and grew a quarter-million jobs a month for 66 months. Obama hid his true plan and is shedding a quarter-million jobs a month.

Obama never wrote any legislation and it shows. He never stood up for reform in crooked Chicago and it shows. In fact, he fit right in. He never took a stand he had to really fight for. That's why he can't take criticism. He's never had any. His only experience is saying pretty words, but now people want results, not just pretty words.

I liked that the article cited Goldman Sach's profits, but not the fact that those profits were just them robbing the people via all the "bailout" money that their employees/treasury secratary stole. Goldman Sachs who uses high tech software called proprietary market manipulation algorithms to siphon millions every day out of the markets. Goldman Sachs: We make money the old fashioned way, We steal it. With all the funny money being pumped in you will have a sucker's period where the market might approach its former highs, What is amazing is that so many are willing to believe that the market can go on forever ignoring the fundamentals. Oh, and if you strip out military/defense then durable goods are down 20%, it just so happended that military is up 125% since 2000 so the numbers are misleading. The past year's durable goods numbers are military up 23% and others down 20%. better explanation.

James in Oh, PLEASE do not comment on anything until you learn even the basics about government and economics.

and Peter, to even bring up Stelzer is a mistake. We're in a bear market rally, the other shoe will drop this winter on corporate real estate and the balloons/variable rates that will come due over 2010 and 2011. Not to mention that the banks are taking our tax money and not lending it ( for any number of reasons ) Goldmans "bonuses" are simply the icing on the cake of theft.

Thanks, lot of good and contradictory opinions. mike could well be right. if he is, can anyone predict when the bear market rally will end?

Obama's stimulus package slowed and hurt the recovery. The only parts of it that worked were tax cuts like the Cash for Clunkers program. That's the narrative, and it fits better with accepted and proven economic theory and reality. And giving Obama more time to work on his healthcare message is simply going to mean that more pork is included, more deals are made, and more clauses that aren't even read are included. Obama and every Democrat who supports him need to be gone NOW.

OK, let's do a thought experiment. Let's say that this recession came about on a Democrat's watch, and a new shiny Republican administration had taken over. Do you think the Dems would WANT any kind of recovery? No, not at all -- liberals/leftists have ALWAYS been willing to sacrifice people for "the cause." Holding POWER is all that matters to these people.

My point? Well, some of you seem to be wishing for a recovery, even if it benefits Obama. Wise up, saps. Until conservatives learn to fight fire with fire, we are forever doomed to play impotent defense, just like George Bush and his daddy.

Oh, and forget about getting "credit" for being more humane/balanced/fair. The "people" don't reward that, and our opponents spin it to makes us look greedy or evil. Learn to play the game, for crying out loud!

I am inclined to agree with mike, with self-interest removed from economics via extreme government intervention, things will continue to fail to "recover" as evidenced by "corporate real estate and the balloons/variable rates" so its pretty scary moving forward... I think that what is important here, is to remember that this didn't take a day to build and it certainly will not be over quickly. Obama has got that message right, what he has wrong (and I of all people cannot blame him) is that economics should be free, truly in the sense that adam smith (as well as locke) describe, however, with competing interests being driven by extreme government power, we find that what should be free is actually shackled to the point that none of us know what to do since the only real force that makes any sense is the notion of self interest (in the second person perspective). So we are basically stuck with a government sadly both democrat and republic who care more about interests and less about freedom. I wish the republicans could be as fiscally consistent as the democrats are socially consistent (in their policies).

Obama: Nobody says nothing better

David Goldman at First Things' "Spengler" blog says there will be no long-term recovery, in large part because our demographics seemed to have hit a tipping point similar to Japan's right before it tanked. Given that the paper tells me births were down 2% over the past year overall--there was no information on the fertility rate in the article, but since it has been hovering at around 2.09, I'm guessing we've dipped well under replacement level--Goldman's skepticism seems worth taking into consideration.

David, babies don't work or contribute to the economy. The real demographic problem is a dearth of young (cheap)but well-educated workers. Of course, if you don't have 'em, you can't put 'em to work a quarter-century later. The real "turning point" happened back in the 1960s and 70s with the baby bust. The baby boom generation has now exhausted itself.

Redwald, I agree that babies don't "work" but I'm not sure they don't contribute to the economy since they have basic needs (and wants) that will be met by other people selling things and services. And as you note, if you don't have them (babies, that is), you don't have workers down the line. So they really are "necessary" for any long-term recovery.

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