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Obama decides 3 million is better than 2.5…. December 21, 2008

Posted by neoavatara in Economy, Politics.
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21stimulus_span

http://www.nytimes.com/2008/12/21/us/21stimulus.html?hp

Now this, I just don’t get.  Maybe I am just a little dull (a completely possible consideration), but someone will have to explain it to me.

Yesterday, Mr. Obama declared that his program to save jobs was too small, and he was going to increase the number of jobs from 2.5 million to 3 million. There argument was that projections predict that as many as 4 million people could be out of work by 2010.  Additionally, supposedly Mr. Obama doesn’t wat to waste money.  From the NY Times:

The message from Mr. Obama was that “there was not going to be any spending money for the sake of spending money,” said Lawrence H. Summers, who will be the senior economic adviser in the White House.

Mark Zandi, chief economist of Moody’s Economy.com, who was an adviser to Senator John McCain’s presidential campaign, said, “My advice is, err on the side of too big a package rather than too little.” In an interview, Mr. Zandi, who lately has advised Democratic leaders in Congress, also said he would probably soon raise his own recommendation of a $600 billion stimulus.

Somehow, these two thoughts are completely contradictory.

Here is the larger point…this goes to the entire mindset of Democrats.  The only way to create jobs is for the government to spend enormous amounts of tax dollars (or in this case, dollars borrowed from foreigners that ultimately will have to be paid for by taxpayers).  Nothing so far in the Obama plan stimulates the free market in any significant way.  In fact, with the phase out of the Bush taxes, some of the taxes will become more restrictive.

Maybe the Democrats have no choice.  If they truly believe this is 1933 again, and the Depression is coming, they could be right.  However, as bad as this recession is predicted to be, right now projections are for it to be less severe than the 1979-1982 recession, in which Ronald Reagan eventually cut taxes (after first raising them) in order to get the free market moving again.

Short term, there may be no other solution other than government spending. However, that can only sustain the economy for so long.  Long term, you require movement of the free market to advance growth of the economy.  How Mr. Obama plans to do that is still a mystery.

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