the R word -- Recession or Reality

This morning Washington Post columnist Harold Meyerson writes a piece lamenting the shortsightedness of thos who want to cut the deficit sinced they seem to forget that we are mired in a great recession. (the column can be reached by clicking on the title to this piece)

Meyerson thinks that so called deficit hawks are forgetting that cutting spending will keep the US from recovery. He ignores all the happy time talk from the Obamacrats that the recession is over -- at least to that extent he can recognize reality. But then, Mayerson goes on to talk about the need for more stimulus.

After reading this column, I sent Mr. Meyerson the following e-mail:

Dear Mr. Meyerson

In your piece about the failure of deficit hawks to mention the recession, you provide the answer to why that is the case. You state: “The Obama stimulus Congress passed last winter saved or created what most economists estimate to be roughly 2 million jobs. For that matter, every major nation enacted a Keynesian stimulus last year, preventing a return to the agony of the 1930s.”

The simple point is that no one believes that. Obama billed the stimulus as an emergency measure that would cap unemployment at 8%. He was not even close. Instead, for just under a trillion dollars, we got 10% unemployment and a U6 above 17%. We also got a package that had as its main component giving money to states and local governments so that they could delay for a year making the cuts necessary to deal with declining revenues. The extra health insurance for teachers or pay raises for street cleaners is a onetime things. It did not boost the economy the way a true investment would. The so-called shovel ready jobs were only ready for shovels if those shovels were to move the BS that was pushed out there by the administration about them. In my town in Connecticut, we finally started our first shovel ready job in the last month. So it only took 16 months for the money to actually hit the street (literally – the job was repaving six different sections of street). Even in the thirties, the government jobs were, for the most part, permanent improvements – post offices, bridges, other infrastructure improvements. Obama’s shovel ready jobs are – for the most part – subsidies to local government maintenance requirements. These have no long lasting effect on production or consumption.

I will not take the time to discuss items like funding various ridiculous studies (salamander migration and the like). You can determine the lasting economic effect of them yourself.

In short, I think you have been listening to the words of the administration rather than looking at the reality. The Obama administration is very good at saying one thing while something else is happening. (e.g. Obamacare will cut the deficit –at least until the bill was passed and signed. Now it will cost 151 billion in the first ten years – and counting.) You need to look at the reality.

There is a strong movement to cut the deficit since that is something that cannot be talked away. We and our descendants will be paying for it well into the future. And you have not given any indication that you have even a clue how to deal with it.

Sincerely,