He Just Doesn’t Get It
by

From President Obama’s speech last night:

Over the next two years, this plan will save or create 3.5 million jobs.  More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.
Because of this plan, there are teachers who can now keep their jobs and educate our kids.  Health care professionals can continue caring for our sick.  There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make. 
Because of this plan, 95% of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.

The problem with this rhetoric is that it is based on a misunderestimation of the historic proportions of what has happened to the U.S. economy since 2006. We are not merely in a transitory slump that can be cured by Keynesian “pump-priming.” The collapse of the housing bubble exposed systemic weaknesses in the American financial structure.

This goes back to September, when John McCain declared, “The fundamentals of our economy are strong.” Michelle Malkin finally got fed up with what she called the “Pollyanna conservatives” and burst out: “The fundamentals of the market suck.” And the sucking has only grown louder since then.

The financial collapse was caused by excessive debt, and now Obama and the Democrats seem to think that they can fix the problem by borrowing money. One could endeavor to explain in detail what’s wrong with their plan — inter alia, if wind turbines were not cost-efficient enough to survive in the market without government subsidies when gasoline was $4 a gallon, why further subsidize Big Wind now? — but these specifics are trivial in comparison to the gigantic misconception that what our economy needs is more deficit spending.

We are headed for ’70s-style “stagflation.” Never mind what the Dow Jones does today; it will be below 6,000 by Christmas. Obama doesn’t know what he’s doing, and what he’s doing is standing at the bottom of a hole demanding we dig faster.

UPDATE: Peter Schiff sees much the same problem.

o
Sign Up to receive Our Latest Updates! Register

Be a Free Market Loving Patriot. Subscribe Today!