P Krug is at it again – lamenting in his latest New York Times editorial how “with Republican obstruction, the best we can hope for (with the economy) is palliative (my emphasis) measures…like the infrastructure program (the $50 billion in roads leading to nowhere) introduced by Obama this weekend.”
It’s hard to overstate how destructive the economic ideas offered earlier this week by John Boehner, the House minority leader, would be if put into practice. Basically, he proposes two things: large tax cuts for the wealthy that would increase the budget deficit while doing little to support the economy, and sharp spending cuts that would depress the economy while doing little to improve budget prospects. Fewer jobs and bigger deficits — the perfect combination.
More broadly, if Republicans regain power, they will surely do what they did during the Bush years: they won’t seriously try to address the economy’s troubles; they’ll just use those troubles as an excuse to push the usual agenda, including Social Security privatization. They’ll also surely try to repeal health reform, which would be another twofer, reducing economic security even as it increases long-term deficits.
Interesting choice of words, that. Palliative care is usually given to the terminally ill. Some of us have hope that the patient can be revived if the administration’s “economic doctors” will stop pumping in their fiscal poison.
Hey Paul – we could only be so lucky as to have the next several years be like what we had under Bush. Folks outside of pointy-headed academia -you know, the ones with actual real-world experience- have a different view than P Krug on what the Republicans might do for us (if it’s anything like the pro-growth policies promulgated by the Bush administration). Paul Stock, writing for Business Insider, penned an article with this title in August of this year: “President Bush Is Crushing Obama On Post Recession Performance.” Yeah, Bush’s last 18 months were not great, but as I’ve posted elsewhere, it surely wasn’t all his fault. Some highlights from Stock’s article:
Lets start with President Bush’s record 12 months post the recession ended in July of 2003. In a note to clients around that time (June 17/2004 to be precise), I wrote..”…we have been getting more good news on the booming US economy”…some of the economic data points that I referenced at the time
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included:
- initial jobless claims dropped 15k to 343k.
- capacity utilization rose to 77.8%
- industrial production rose 1.1% in May (strongest in 6 years)
- factory production rose 6.4%, the biggest increase since April 2000
- housing starts strong at an annual rate of 2.12 million which surpasses previous years 1.85million, the most in 25 years.
The good news on the economy in the 12 month period following the recessions trough in mid 2003 didn’t end there. I noted that: “consumers are spending at a 9% pace; companies are investing at a 9.5% rate on new equipment; manufacturing industries are producing at a 6.5% rate; technology companies are expanding at a 30% rate. As well, 1.4million new jobs were created (ed note not saved) in the previous 9 months, personal incomes up 5.7% over the previous 12 months, wage and salary growth up 4.8% and after tax disposable incomes up 4.3%”. President Bush’s aggressive tax cuts for individuals and corporations led to a rebound in GDP growth to 3.8% for the full year 2004 following the recession and stocks were up over 10%. Also…politically…President Bush’s approval rating hovered around 50% for most of the year.
Contrast this with Obama’s record of “achievement.”
Now, fast forward to 2010. We have a complete tly different picture 12 months following the end of the most recent recession. In fact…the policies implemented by the current administration have produced quite a different, more negative economic environment that Fed Chairman Bernanke describes as one with “unusual uncertainty”. The failure of these stimulus policies have led many to fear the dreaded ‘double dip”. So lets look at President Obama’s record one year post recession end:
- Consumer confidence remains low
- Stocks are hugging the flat line year to date
- The housing market remains in the doldrums not responding to record gobs of stimulus money
- Consumer spending and incomes are stagnating according to data released this AM
- Bernanke is quoted as saying today that the economy is still short of full recovery
- Treasury Secretary Geithner is saying today that unemployment will get worse before it gets better.
- GDP growth slowed in the 2nd qtr to 2.4% from 3.7% in 1st qtr.
- Growth in the manufacturing sector is moderating
- Unemployment remains stubbornly high bordering on double digits at 9.5%
- Jobless claims continue to average over 450k
- Friday’s jobs report is expected to show a second month of net job losses
- The Fed may be getting desperate as the rumors of QE Part Deux escalate
- Impression that the Fed is “pushing on a string” have surfaced
- Flattening yield curve
- Rising Deficits and Debt are a growing concern with increased entitlement spending
- Confusion about impact of Fin reg and New Health Care legislation leading to “unusual uncertainty” which has catalyzed record levels of corporate cash sidelined
- The dreaded double “D’s” Deflation and Deleveraging are on the radar!
- Capacity Utilization remains below 75%
- President Obama’s approval rating currently at low point of 41% according to latest Gallup poll
Now, to be fair, President Obama did come into office at a stressful economic time after the real estate bust…but again, to be fair President Bush also inherited a looser economy following the Dotcom bust where trillions of dollars of wealth had also been wiped out. And then of course there was the uncertainty caused by the September 11th terrorist attacks.
Remember, Stock’s article was written in August, so by now the Wreckovery Summer has kicked in, and things are looking…oh, wait – what? Oh, it’s not working? Okay. Oh, but today, Obama (Descended from Olympus and Lightworker Genius) appointed Austan Goolsbee as his chief economic advisor – another pointy-headed academic with no private sector experience. Goolsbee, according to an administration official, is “young, and energetic, and good on TV.” That brings me a great deal of comfort.
Shut up Krugman, and someone pass me the duct tape.
