Obama Is Failing Because We Just Didn’t Spend Enough


The economic policies of President Obama are failing. And just as predictable as the failure is the response from the hallelujah chorus of the left. New York Times columnist Paul Krugman, who now joins the Janeane Garafalo School of Lefty Loonies, opines in Saturday’s addition of the Oregonian:

“One group – the group that got almost all of the attention – declared that the stimulus was much too large, and would lead to disaster. If you were, say, reading the Wall Street Journal’s opinion pages in early 2009, you would have been repeatedly informed that the Obama plan would lead to skyrocketing interest rates and soaring inflation.

“The other group, which included yours truly [Krugman], warned that the plan was much too small given the economic forecast then available.”


There we are. It’s not that more massive deficit spending in an economy already crippled by massive deficits was ill conceived, it is simply that we didn’t spend enough. What a moron.

The fact of the matter is that most economists agree that similar massive government programs initiated by President Franklin Roosevelt effectively delayed recovery from the Great Depression by years. And we know that government attempts to manipulate the financial markets in the wake of Japan’s economic downturn led to the so-called Lost Decade for what was once the second largest economy in the world.

Even if it could be demonstrated that massive government spending has triggered an economic recovery somewhere, the “stimulus” spending envisioned by Pres. Obama was bound to fail. Obama treated the “stimulus” as an open checkbook to reward political loyalists (ACORN, the public employee unions, the university crowd, and the “green” movement) and to increase the size of government and its control over the private sector. In each instance the spending contributed nothing to a sustainable enterprise, rather it simply increased a recurring expense to taxpayers – funding yet another government program.

Each dollar spent increasing the number of public employees, their annual raises, their increased cost of healthcare benefits and their ever burgeoning pension costs, simply raised the level of recurring expenses that taxpayers are expected to pay. The increased taxes necessary to sustain that level of spending removes ever increasing amounts of money otherwise available for private sector investment to create, grow and sustain productive jobs.

Increasing recurring public expenditures for government jobs contributes nothing to economic growth – in fact, because of the added burden on taxpayers, it is generally regarded as retarding economic growth and recovery.

Even in instances where the stated purpose of the expenditures was to sustain teachers or law enforcement, the net effect was to allow state government to defer facing the reality of their past unsustainable spending levels.

For instance, Oregon’s general fund budget is over $1.4 Billion in the hole. That hole gets deeper in the next biennium. But “stimulus” funds from the federal government have allowed Gov. Kulongoski and the Democrat state legislature to avoid making the necessary budget cuts in other areas to continue adequate funding for the schools. In other words, the stimulus funds allowed Kulongoski to avoid the consequences of his own reckless spending.

Whereas a recent nine percent across the board state budget reduction should have resulted in a nine percent reduction in the number of public employees, Kulongoski managed to manipulate the numbers so that the actual number of public employees reduced was less than three-tenths of one percent – a number that is less than natural attrition through retirement, illness or moving. Absent stimulus funds, Kulongoski and his Democrat colleagues would have had to make the choice between adequate funding for education and preserving jobs for their financial arm – the public employees unions.

Had they been forced to make that choice the recurring expense load on taxpayers would have been reduced for the future and more money would have been available for investment and job creation.

But handing the checkbook to those who believe in the primacy of government, who are dedicated to the growth of government, and who are beholden to the public employee unions who benefit from such expenditures will inevitably result in just what we have today: a delayed recovery, a state and national debt that may exceed our ability to ever repay, and morons like Krugman who thinks we should just spend more.

Next time somebody stands for “change” you might want to ask them what that change will look like.

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  • Anonymous

    “Whereas a recent nine percent across the board state budget reduction should have resulted in a nine percent reduction in the number of public employees”

    Now this makes no sense at all. In the first place, the 9% reduction was in the general funds budget, not the total state budget, which is far larger. Second, the lion’s share of the state budget goes to K-12 schools, not to fund state employees. So the employee cuts will have to be made by the schools, not the state. Third, there was a desire to protect state services — no closed prisons, no police reductions, etc — so in fact, much of the cut will be covered by agency reserves.

  • Rupert in Springfield

    This is ridiculous. Krugman is trying to re write history.

    First off, regardless of the reasonsing, Krugman was hardly at the forefront of those saying the stimulous would fail. Quite the opposite, he was regularly mentioned here as one of the “Nobel winning economists who support the stimulus”

    This nonsense that Krugman is now trying to claim he mentioned in anyway more than passing that the stimulus wouldn’t work from the get go is an attempt to cover up his tracks.

    Second – Every economist I know of, including Robert Reich said loudly and clearly that if you were committed to government spending as the method of stimulus, the thing to do was to get it out as quickly as possible. Not one economist said that if you are trying to stimulate the economy, it is better to delay release of government funds as Obama did.

    It was also pointed out quite clearly that government spending has the disadvantage of being less immediate, but not necessarily less effective, than tax cuts. Therefore again, the money must be gotten out quickly. This was also known and well pointed out to Obama, again the president went against all experience.

    In addition we had the Japan experiment of the 1990’s. The famous “lost decade” with the lesson learned that stimulus there had little or no effect because it was released slowly and gradually. Again, this was also pointed out loudly and clearly to Obama. Again Obama went against all advice.

    The man who said we had to pass a stimulus quickly, because the situation was dire, now claims he didn’t know the true economic situation at the time and thats why unemployment soared over the 8% he said the stimulus would hold it to.

    Let’s think about that.

    We had to pass the stimulus really quickly – So Obama could hold off the spending for a year – And now it didnt work because Obama says he didnt know what was going on when we passed it.

    Oh thats real confidence inspiring. Im glad this guy has his finger on the button.

    Obama is the president who established the fashion of passing massive bills quickly with politicians openly admitting they had not read them. We all remember the administration fools who criticized the Arizona Immigration law but couldnt be bothered to read the 17 page document. Mental giants these are not.

    Well, Obama spent 25% of the stimulus the first year, and held on to 75% for 2010.

    Against the advice of everyone he let the money out slowly and got the predicted results. A less effective stimulus.

    Now Krugman pops up and wants everyone to think he was on the right side of this issue from the get go.

    Apparently Paul Krugman thinks in addition to forgetting his support of the stimulus no one out their owns a calculator.

    Mr. Krugman – The stimulus was over $1,000,000,000,000 dollars.

    Mr Krugman – That amount is enough to hand every single taxpayer a check for over $7,000. A check for $3,500 could have been sent to every taxpayer last year and this.

    Mr. Krugman – We saw how people jumped through hoops for a $5,000 home tax credit, and $5,000 on a clunker – It would be hard to argue that sending them a check for $7,000 would not have had far more effect than Obama’s nonsense.

    Please dont think we are all idiots Mr. Krugman. Not all of us are fools as to why the money was held back. Obama knew good and well the economy would be lousy for a long time. He admitted such in his interview with Oprah “we have about six months before this thing goes south on us”.

    The stimulus spending was held off until 2010 as a mid term election slush fund. Obama knew the economy would be bad well into 2010, and thought that if he had the stimulus funds to spend and create jobs then, rather than 2009, it wold have more of an election year punch to it.

    Well, Obama gambled and lost. Shovel Ready projects turned out to mean shoveling something different than the way the public initially understood the phrase. Now people are mad as hell Obama spent over $1T to little or no effect as they see it.

    Mr. Krugmans suggestion, that the stimulus failed because it was simply not enough is one he should keep to himself lest he be though certifiable by those of us with any common sense. $1T is enough Mr. Krugman, $7,000 for every taxpayer is enough.

  • valley p

    “There we are. It’s not that more massive deficit spending in an economy already crippled by massive deficits was ill conceived, it is simply that we didn’t spend enough. What a moron.”

    So Krugman, a nobel prize winning economist, is a “moron” for predicting that the stimulus would prove to be too small? And Larry Huss is a genius for thinking that deficit spending to stave off a depression is bad economics? Herbert Hoover is alive and well. Way to keep tradition alive Larry.

    “The fact of the matter is that most economists agree that similar massive government programs initiated by President Franklin Roosevelt effectively delayed recovery from the Great Depression by years.”

    There is no fact of this matter. There are a few economists who have attempted to re-write the history of the depression to conform to right wing ideology that government spending has to be bad no matter what. Then there are the actual facts that economic growth was highest in the 30s when the government was spending more, and lowest when it cut back.

    And Rupert adds this brilliance, misspellings his, not mine: “First off, regardless of the reasonsing, Krugman was hardly at the forefront of those saying the stimulous would fail. Quite the opposite, he was regularly mentioned here as one of the “Nobel winning economists who support the stimulus””

    Well yes, he did win the Nobel, and was “mentioned here,” as if that matters. And yes he supported stimulus spending at TWICE the level it ended up, and WITHOUT the ineffective tax cuts that consumed half the stimulus, but were added to please 2 Republican Senators. Krugman also was clear and consistent that the level of stimulus Obama was able to get passed was too small to make a big dent in unemployment, and that this would not play well in the 2010 election.

    “This nonsense that Krugman is now trying to claim he mentioned in anyway more than passing that the stimulus wouldn’t work from the get go is an attempt to cover up his tracks.”

    You know Rupert, you could try and go back and read what Krugman wrote, or you could say he is only claiming now that he said the stimulus was too small. Sine you are not interested in reality, you chose the latter.

    OK…here is what Krugman wrote WELL BEFORE the stimulus passed. You tell me that his words are written only “in passing.”

    *But Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.

    Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is opening up between what the American economy can produce and what it’s able to sell.

    And the Obama plan is nowhere near big enough to fill this “output gap.”

    Earlier this week, the Congressional Budget Office came out with its latest analysis of the budget and economic outlook. The budget office says that in the absence of a stimulus plan, the unemployment rate would rise above 9 percent by early 2010, and stay high for years to come.

    Grim as this projection is, by the way, it’s actually optimistic compared with some independent forecasts. Mr. Obama himself has been saying that without a stimulus plan, the unemployment rate could go into double digits*

    https://www.nytimes.com/2009/01/09/opinion/09krugman.html?_r=1

    Easy enough to look this up Rupert. It took me 2 minutes.

    • Rupert in Springfield

      Looks like another miss for you Dean. I never said Krugman had never brought this up. Again, you might want to actually read before responding. You constantly make this error and never learn from it.
      I said he had hardly lead the charge against it as his criticism had been minimal, only in passing. Let’s face it you look a little ridiculous now as Krugman (sorry Nobel laureate Paul Krugman as you tended today) was constantly cited by you as a major economist who got behind the stimulus.

      • Rupert in Springfield

        Today=to say. Damn iPhone auto fill.

      • valley p

        Yeah…I quoted you as saying “in passing, ” so its not like I did not notice. My point is that he did not say this “in passing.” It was the entire focus of his op ed. And he wrote several of them saying essentially the same thing over a period of months. So to wit…your “in passing” comment was wrong.

        The error I constantly make is in pointing out your errors. Its a fruitless exercise, I know that.

        Making stuff up…that I said Krugman was behind *THE* stimulus, is nonsense. He was behind *A* stimulus, much larger than the one Obama was behind. That is the whole point. That you can’t tell the difference is your limitation, not mine or Krugmans.

  • Anonymous

    Unusually insightful!

  • Marvin McConoughey

    Krugman is an interesting economist, beyond being awarded a Nobel prize. In a way, he is a throwback to a much earlier American economist, Robert Eisner, who also argued for deficit spending. The weakness of such economists is that they consistently fail to identify when, where, and how, later generations will pay for the accumulated deficit. Often, the assumption is that the economy will grow and make debt unimportant. As Greece shows, such thinking doesn’t always work.

    • valley p

      Marvin…The Greek situation is so different from our that making comparisons is ridiculous. Greece does not have its own currency. It uses the Euro. This means that Greece cannot adjust, or allow the market to adjust its currency against its debt and ability to repay. The US not only has our own currency, we are the reserve currency for the world. In effect this means there cannot be a run on the bank, as there was with Greece. When that happened Greece had no option other than default or a bailout from the richer euro countries. They could not devalue their currency because they did not have one.

      When Krugman and other liberal economists argue that we can sustain a pretty high debt load, that is because we can and we have always done so. As long as the economy grows fast enough, the previous debt stays the same or shrinks as a percent of the economy. Its the same thing as if you made $10,000 a year when you were young and could sustain a $50 a month credit card payment, but now you earn $50K a year and can sustain a $250 monthly payment.

      The 2 keys are (a) an economy that grows as fast or faster than the debt over time and (b) the willingness of the American people to be taxed to pay that debt. Liberal economists, including Krugman say we can sustain a long term debt equal to 3% of GDP without creating inflation. They do not say the sky is the limit.

      Conservative economists seem to have nothing to say other than cut taxes and cut spending, never identifying what they would cut spending on or by how much.

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