Barack Obama, in an interview that just aired on "Meet the
Press," acknowledged that the federal deficit was already
massive, likely over $1 trillion, and yet he said that wouldn't
dissuade him from pushing an economic stimulus package that would
be "substantial." Obama said that we have to get a "blood
infusion to the patient" first, and couldn't be concerned about
the short-term deficit. Nor, apparently, will the deficit
sidetrack his health care, education, or energy agenda.
What's clear is that Obama has fully embraced Keynesian economics
and the idea of deficit spending, which was discredited in the
last century. Despite the massive New Deal projects that FDR
employed upon taking office, unemployment remained in the
double-digits until WWII.
Also, what's interesting is that in a departure from his campaign
rhetoric, our new president-elect now says that the economic
crisis we face is "nothing compared" to what we were going
through when FDR took office in 1933. But what he didn't
acknowledge is that when FDR took office -- before the New Deal,
before the Great Society -- federal spending was just
over 7 percent of GDP, but now it's above 20
percent, or nearly triple in proportional terms. In other
words, FDR had a lot more fiscal agility than Obama does.
