Wednesday, January 28, 2009

Democrats to Milk Economic Crisis for Trillions

No one doubts Americans are facing the most severe economic crisis in decades, but while conservatives are inclined toward targeted tax cuts and perhaps a market-oriented jobs-relief stimulus, Democrats on the progressive left have turned to end-of-times economic rhetoric to justify the biggest expansion of the pork-barrel welfare state in American history.

Paul Krugman, who is generally recognized as the most important leftist advocating an unprecedented governmental spending bailout, is a perfect case in point. I read Krugman's "Letter to President Obama" last night, and the scope of this man's proposals, and the economic fearmongering used to justify it, is truly breathtaking:

How bad is the economic outlook? Worse than almost anyone imagined ....

There's nothing in either the data or the underlying situation to suggest that the plunge in employment will slow anytime soon, which means that by late this year we could be 10 million or more jobs short of where we should be. This, in turn, would mean an unemployment rate of more than nine percent. Add in those who aren't counted in the standard rate because they've given up looking for work, plus those forced to take part-time jobs when they want to work full-time, and we're probably looking at a real-world unemployment rate of around 15 percent — more than 20 million Americans frustrated in their efforts to find work.

The human cost of a slump that severe would be enormous. The Center on Budget and Policy Priorities, a nonpartisan research group that analyzes government programs, recently estimated the effects of a rise in the unemployment rate to nine percent — a worst-case scenario that now seems all too likely. So what will happen if unemployment rises to nine percent or more? As many as 10 million middle-class Americans would be pushed into poverty, and another 6 million would be pushed into "deep poverty," the severe deprivation that happens when your income is less than half the poverty level. Many of the Americans losing their jobs would lose their health insurance too, worsening the already grim state of U.S. health care and crowding emergency rooms with those who have nowhere else to go. Meanwhile, millions more Americans would lose their homes. State and local governments, deprived of much of their revenue, would have to cut back on even the most essential services.
I love the tweaking of the unemployment estimates, designed to get closer to that magic number of 25 percent unemployment in the 1930s, which would make all those FDR analogies slightly more compelling. Krugman dismisses tax cuts as an insufficient stimulus, and suggests that we need "to spend $800 billion a year to achieve a full economic recovery. Anything less than $500 billion a year will be much too little to produce an economic turnaround."

And where's all that spending going to go? It's not just road, bridges, and telecommunications infrastructure:

FDR rebuilt America not just by getting us through depression and war, but by making us a more just and secure society. On one side, he created social-insurance programs, above all Social Security, that protect working Americans to this day. On the other, he oversaw the creation of a much more equal economy, creating a middle-class society that lasted for decades, until conservative economic policies ushered in the new age of inequality that prevails today. You have a chance to emulate FDR's achievements, and the ultimate judgment on your presidency will rest on whether you seize that chance.

The biggest, most important legacy you can leave to the nation will be to give us, finally, what every other advanced nation already has: guaranteed health care for all our citizens. The current crisis has given us an object lesson in the need for universal health care, in two ways. It has highlighted the vulnerability of Americans whose health insurance is tied to jobs that can so easily disappear. And it has made it clear that our current system is bad for business, too — the Big Three automakers wouldn't be in nearly as much trouble if they weren't trying to pay the medical bills of their former employees as well as their current workers. You have a mandate for change; the economic crisis has shown just how much the system needs change. So now is the time to pass legislation establishing a system that covers everyone.

What should this system look like? Some progressives insist that we should move immediately to a single-payer system — Medicare for all. Although this would be both the fairest and most efficient way to ensure that all Americans get the health care they need, let's be frank: Single-payer probably isn't politically achievable right now, simply because it would represent too great a change. At least at first, Americans who have good private health insurance will be reluctant to trade that insurance for a public program, even if that program will ultimately prove better.
This is why progressive leftists love Paul Krugman. The guy's a Princeton economist and Nobel laureate. More importantly, the man's an "establishment" statist who can use his "credentials" to discredit those who rightly repudiate his socialist program.

But folks shouldn't be fooled by the sky-is-falling rhetoric. This morning's Wall Street Journal has a useful piece, "
A 40-Year Wish List," which notes that Chief of Staff Rahm Emanuel once said to President Obama, "Never let a serious crisis go to waste."

But check out David Harsanyi, "
The Biggest Con — Ever":

Democrats have concocted a surefire political victory. They've notified America that the so-called "stimulus" bill might take a long time to work — which is exceptionally handy, considering we always come out of a recession at some point.

The problem is there is no evidence that colossal government spending and expansion will help a nation claw its way out of economic trouble or, more importantly, generate a single job through real economic growth.

So what do you do with an unproven idea? Well, you go big. Make the proposal the most expensive to ever adorn paper — or, more precisely, a trillion scraps of paper. Scare the holy living hell out of detractors with doomsday scenarios worthy of Nostradamus.


Anonymous said...

I guess that's the difference between liberals and conservatives. Liberals want to use a crisis as an excuse to rebuild infrastructure and provide health insurance for Americans. Conservatives want to use a crisis as an excuse to start an unprovoked war.

davemartin7777 said...

The right-wing never mentions the Republican's largest most expensive SOCIAL EXPERIMENT in AMERICAN HISTORY... Iraq.

It's going to cost 1-3 TRILLION DOLLARS... but heathcare for Americans, oh that's socialism.

Quite simply, we are spending it over there so we don't have to spend it here.

Libby said...

awww, holy crap, donald! this is getting so bad that all of the solutions are starting to look worse than the problems!!

Norm said...

I guess that other huge "social experiment" we called the Marshall Plan was a total dud. Those Europeans are a stupid waste. Trying to free Iraq, which holds a huge percentage of the world oil reserves, is just stupid...right Dave?

And that medicare drug program never happened....seniors are not saving thousands of dollars annually.

JoMala "Truth 101" Kelly said...

Hey Norm: Is this the same Medicare Drug Program that Bush wouldn't let negotiate drug prices? Yeah Man! You R's really know how to run a business and save money. How's your boy Thain doing Norm? Did you get a chance to see the new office before he was run off?

Tom the Redhunter said...

Donald, you hit the nail on the head with this post.

Indeed Congressman Frank Lucas (R-OK) said
on KNID radio that during his meeting with President Obama that Obama said that

"The real problem was that Roosevelt slowed down on public spending in the first two years. If he’d just kept on spending that money, we’d have gotten out of the depression quicker"

Yi yi yi, grab your wallets, everyone.

Obama will bankrupt us for certain, and all to increase federal power and leave us less free.

Worse, once government gets this type of power it never gives it up. The Patriot Act can be overturned with a stroke of the pen, but once you've got "universal health care" you can never get rid of it.

Truth101 said: "Is this the same Medicare Drug Program that Bush wouldn't let negotiate drug prices?"

Translation of "negotiate drug prices" - threaten and intimidate drug companies into selling their products at lower prices or be hit with regulations or government takeover.