Economics

Tomorrow We Scrimp, But Tonight We Spend!

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Here's some text from a speech likely president Barack Obama gave a week ago in Toledo, Ohio:

I won't pretend this [Obama's economic "rescue plan"] will be easy or come without cost. We'll have to set priorities as never before, and stick to them. That means pursuing investments in areas such as energy, education and health care that bear directly on our economic future, while deferring other things we can afford to do without….

It also means promoting a new ethic of responsibility. Part of the reason this crisis occurred is that everyone was living beyond their means—from Wall Street to Washington to even some on Main Street. CEOs got greedy. Politicians spent money they didn't have. Lenders tricked people into buying homes they couldn't afford and some folks knew they couldn't afford them and bought them anyway.

We've lived through an era of easy money, in which we were allowed and even encouraged to spend without limits; to borrow instead of save….

Once we get past the present emergency, which requires immediate new investments, we have to break that cycle of debt.

Whole text, which includes details on a whole lot of new and increased spending and not many specifics related to "scouring the federal budget, line-by-line, ending programs that we don't need and making the ones we do work more efficiently and cost less" here.

Given Obama's virtual complete lack of interest in detailing any area of the economy that the government should not be involved in (in the speech, he lauds the bailouts of the Big 2.5 automakers and the financial industry and suggests that more might be necessary; bashes free trade; talks up giveaways to "small businesses," yadda yadda yadda), I humbly submit that the idea of spending today and scrimping tomorrow is magical thinking at best.

One of the oddest surprises of the past 30 years or so was that Bill Clinton's first two budgets, passed by a Democratic majority, were leaner that what came later, with a budget-slashing (har har har) Repbublican Congress. Clinton benefited mightily from what used to be called the peace dividend, the post-Cold War drawdown in military spending (GOP "revolutionaries" such as Newt Gingrich are always slow to acknowledge that the defense budget is the real moving piece of discretionary spending; Nixon, H.W. Bush, and Clinton all took a chisel to defense).

Clinton was a free trader and interested in policy innovation. By contrast, Obama never misses a chance to mention China in a disparaging way and all of his plans seem to revolve around throwing money at any perceived problems. Does anyone think he bring fiscal restraint to the federal budget? Does anyone think he'll approach entitlement reform with any weapon other than increased payroll taxes?

Obama's election will end centuries' worth of odious racial discourse in America and that alone may well be worth a crap economy and videos of kids spreading happiness from now until Doomsday. But let's not pretend that this sort of proposal and a dozen others like it, also from the Toledo stumper, represents change anyone can take seriously:

We will also save one million jobs by creating a Jobs and Growth Fund that will provide money to states and local communities so that they can move forward with projects to rebuild and repair our roads, our bridges, and our schools. A lot of these projects and these jobs are at risk right now because of budget shortfalls, but this fund will make sure they continue.