What's [President Obama] saying?The President is working his way out of a job.
Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.
That's a wow statement. It's profoundly uneconomic. Government doesn't face the same borrowing constraints as a household. It seems clear that the government can afford current levels of spending. It wasn't that long ago that government revenues were far higher than they currently are. And there is precious little evidence that the confidence-creating impact of deficit reduction, if there's one at all, will compensate for the contractionary impact of budget cuts. It seems quite clear that cutting government will be a net negative for the current economy.
I don't know why Barack Obama is making these claims. The most straightforward explanation is that he believes it. At this point, it hardly matters. The president has adopted this framing of the current economic situation, and his policy choices will be constrained by it going forth; whether the choice was made out of heartfelt belief or a sense of political necessity is irrelevant.
Monday, July 4, 2011
The Economist is shocked...
...shocked to find that Obama is as bad at economics as he seems to be...