An economy built to stall


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“An economy built to stall.”

In his first two years in office, Democrats gave Mr. Obama everything he wanted, save for cap and trade and union card-check, which would have done even more harm to job creation. They passed stimulus, ObamaCare, multiple housing bailouts, Dodd-Frank and more.

Even after Republicans took the House, they gave Mr. Obama the payroll tax holiday he demanded first for 2011 and again for 2012. Far from some new fiscal “austerity,” overall federal spending hasn’t declined. Meanwhile, the Federal Reserve has delivered monetary stimulus after stimulus—QE I, QE II, Operation Twist, and 42 months of near-zero interest rates with the promise of 30 months more.

Mr. Obama has had the freest run of policy of any President since LBJ. So maybe the problem is the policies.

Maybe Milton Friedman was right that “temporary, targeted” tax cuts don’t change the incentives to invest or hire because people aren’t stupid. Maybe each $1 of new federal spending doesn’t produce a “multiplier” of 1.5 times that in added output. Maybe the historic burst of regulation of the last three years has harmed business confidence and job creation. And maybe the uncertainty that comes from helter-skelter fiscal and monetary policy has dampened the animal spirits needed for a durable expansion.

As I said yesterday, though no president or Congress is entirely to blame for the state of the economy, they both can do great harm if they make decisions that interfere with the freedom of the market. And sadly, having the government interfere with the freedom of the market has been Obama’s mantra since the day he took office.

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4 comments

  • jwing

    The principle of “subsidiarity” will be a key component to restarting this stalled economy with its aging demograhics. More localized fiscal control with fewer entagling federal agences’ regulations at the state and city level will kick-start the american spirit and economy. Individual responsibility with the freedom to make independent decisions without federal approval or mindless red tape will reignite the american desire to invent, create, tincker and take risks, all in the hope of seeking the reward…profit, stability and a better standard of living for our children.

  • Patrick

    This economy will only get back to work when we get the lefty socialists out of office.

    We don’t need to tinker with anything other than repealing some of the EPA restrictions and this Obama healthcare crap.

    Business will not invest more just than enough to keep the status quot until they are sure the administration and its minions will not up and change the rules halfway through the game. Business wants stability more than anything else.
    This administration has been anything BUT stable to business. They have bad mouthed them at every turn just for a vote and then set policy against them for more votes. Then they set even more policies against them out of progressive ‘we know better than you’ believes.

    Basically just get out of the way and make sure the business owners believe it.

  • wodun

    The recession officially ended shortly after Obama took office before stimulus had any chance to kick in. IMO the economy handled the wasteful stimulus just fine but it couldn’t handle the over regulation, obamacare, and the uncertainty created by Obama’s anti-business rhetoric.

    Obama was too impatient. He ignored the reality of the economy and pushed through his bad policies. If he had waited until the economy improved he could have had his cake and eaten pie too and by the time his policies hurt the economy he would have been in his second term or out of office.

    His sense of timing is terrible.

  • Chris L

    It’s not his sense of timing that is the problem, it’s his sense of self-importance. While letting events take their course was the smart move, it wasn’t possible with this particular president. Leaving the economy alone would have left him as the spectator to events, not the master of them. For someone with Obama’s ego, that would not do. He had to have an active role in what was happening, as the whole point of his election was to save the economy and heal the Earth. That it didn’t turn out so well is just reality’s way of harshing Obama’s mellow.

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