Michael
Dec 29th 2008, 12:46 PM
With the United States facing gloomy forecasts of up to 10 percent unemployment and a deepening recession in 2009 -- likely "the bleakest economic outlook since World War II" -- Lawrence Summers said creating three million new jobs was a "key pillar" of Obama's plan.
Obama senior adviser David Axelrod told CBS television Sunday that 675 billion and 775 billion were "not fixed" numbers.
"In this crisis, doing too little poses a greater threat than doing too much," Summers, tapped to head the White House National Economic Council, wrote in an editorial in The Washington Post.
Source (http://www.talkingpointsmemo.com/news/2008/12/obama_economic_plan_to_cost_be.php)
That's a staggering sum of money to spend on economic stimulus - especially coming on top of spending a similarly large sum bailing out Wall Street's greed and high risk gambles gone bad.
I don't see much good in these kind of massive boondoggle spending binges. Certainly backstopping the financial situation in state finances, a temporary increase in the foodstamps program and an extension of unemployment benefit period are all proven tactics that are both cost effective and efficient at giving a boost to GDP during a recessionary downturn. After that, its all just binge spending on infrastructure projects that are notoriously laden with pork barrel politics.
It is to be noted that seeking to prevent the economy from going through a natural economic cycle is the kind of policy that creates asset bubbles and makes market corrections (like the present downturn) more necessary.
There is lots of evidence that the 'housing boom' of the 2000's (i.e. the housing bubble) was almost entirely created by US monetary and fiscal policies of the 2001-02 period - that were also targeted at preventing the US economy from actually suffering the recession that the market needed. A recession delayed is a recession that will come back with a vengence.
Lets just say that the US economy needs a deep recession in order to deal with the economic unbalances that have been decades in the making. A major downturn is needed to shake out the financial and real-estate sectors. No pain, no gain - and without reforming the US economy, we'll all be right back here soon enough.
But of course, we'll have a big game of inflation to play (and skyrocketing government debt) to deal with before we get there...
Obama senior adviser David Axelrod told CBS television Sunday that 675 billion and 775 billion were "not fixed" numbers.
"In this crisis, doing too little poses a greater threat than doing too much," Summers, tapped to head the White House National Economic Council, wrote in an editorial in The Washington Post.
Source (http://www.talkingpointsmemo.com/news/2008/12/obama_economic_plan_to_cost_be.php)
That's a staggering sum of money to spend on economic stimulus - especially coming on top of spending a similarly large sum bailing out Wall Street's greed and high risk gambles gone bad.
I don't see much good in these kind of massive boondoggle spending binges. Certainly backstopping the financial situation in state finances, a temporary increase in the foodstamps program and an extension of unemployment benefit period are all proven tactics that are both cost effective and efficient at giving a boost to GDP during a recessionary downturn. After that, its all just binge spending on infrastructure projects that are notoriously laden with pork barrel politics.
It is to be noted that seeking to prevent the economy from going through a natural economic cycle is the kind of policy that creates asset bubbles and makes market corrections (like the present downturn) more necessary.
There is lots of evidence that the 'housing boom' of the 2000's (i.e. the housing bubble) was almost entirely created by US monetary and fiscal policies of the 2001-02 period - that were also targeted at preventing the US economy from actually suffering the recession that the market needed. A recession delayed is a recession that will come back with a vengence.
Lets just say that the US economy needs a deep recession in order to deal with the economic unbalances that have been decades in the making. A major downturn is needed to shake out the financial and real-estate sectors. No pain, no gain - and without reforming the US economy, we'll all be right back here soon enough.
But of course, we'll have a big game of inflation to play (and skyrocketing government debt) to deal with before we get there...