Why not a second stimulus?

Reuters reports that Obama is sticking wth his claim that the stimulus stopped the bleeding and spurred an economic recovery, although a slow recovery. If Obama believes what he's saying, then he should be using his influence to push a second stimulus that will get the recovery moving faster. If it's true that the first stimulus had the economic power to get the economy moving in the right direction, then it stands to reason that another stimulus will be effective and that the economic growth will have the multiplier effect to pay for itself and then some. Why is Obama not making this case? There are at least two possibilties for Obama's failure to make the case for a second stimulus: that the stimulus misdirected capital and was a payoff to his supporters, and Obama knows this; that he thinks it's politically damaging to push for another stimulus.

Politics in America has degenerated into an acceptance of dishonesty and manipulation from the occupants of the highest office in the nation. If Obama knows the first stimulus was a pork-barrel bonanza and had little effect on the economy, except a negative effect of scaring businesses, then he is a liar. If Obama truly believes the first stimulus was effective and that further government spending such as the first stimulus will move the economy into real growth and will lower the unemployment rate, but he is not pushing the idea because of political reasons, then he lacks the integrity to be president.

The president and the Democrats in congress who have stated that the stimulus worked, who claim that government spending can generate economic growth, need to be called on their reluctance to push for another stimulus. They can't say automatically, before trying, that the Republicans are blocking them -- if they believe it's true, they should make the case to the public, and a few are, but most are morphing into fiscal conservatives as the elections draw near. When will the media confront this dishonesty?

Ezra Klein -- The Master Builder of Strawmen

http://voices.washingtonpost.com/ezra-klein/2010/08/research_desk_where_would_unem.html

The choice is not the stimulus or nothing, although this is what liberals and Obama robots dishonestly set forth as the choice.

The alternative to wasteful government spending would be something like an all out effort to create a free market environment, a lowering or eradication of taxes coupled with spending cuts, then a trillion dollars or more invested by people who know how to expand the economy and create new wealth.

What Klein refuses to admit is that all the government intervention shut down the private market, therefore government had to spend a trillion dollars -- if the government had not intervened as the market was retracting, but, rather, had done everything possible to remove the obstacles to economic growth, the recovery would be well on the way or complete by now.

Had the government not guided capital into housing to begin with, starting years ago, the retraction would not have been as serious -- so the choice is not between government spending and nothing -- it's between government spending and private sector investment and wealth creation. 

Bruce Bartlett's plan for an economy full of virtual people

http://capitalgainsandgames.com/blog/bruce-bartlett/1873/time-new-thinking-stimulus

Actually, people don't factor hardly at all into Bartlett's plans -- if you simply manipulate money, the economy will recover, perhaps as people sleep. If a bank offers a company money, the company will take the money, expand and hire workers, regardless of what politicians in Washington DC are doing or how much these new hires will cost the company, and regardless of new regulations which could raise the cost of expansion and hiring. Who knew that ending the recession would be as easy as forcing banks to loan money? We've wasted so much time.

It's strange that small and medium size businesses haven't been making a fuss about tight lending, but rather 6 out of 10 blame government intervention for their lack of confidence. It just goes to show why we need peope like Bartett to quit writing and start managing the country, because obviously banks and other businesses don't know what's good for them. If Bartlett is right, we ought to be booming in no time flat, just force the banks to lend money -- snap! Better yet, have government take over the banks and force companies to accept the loans and then expand and hire -- now, there's some new stimulus thinking.

Government fraud and waste

http://www.downsizinggovernment.org/liheap-fraud

When you start adding up waste and fraud associated with government programs, the amount is staggering. Medicare, illegitimate unemployment payments, military contract waste and fraud and, as the link above points to, stimulus programs -- it's becoming a very serious problem as government grows and spending increases. As we debate the need for more stimulus vs spending cuts, it might be wise to tackle the problem of waste and corruption. Every politician promises before being elected to cut waste and corruption, but the problem gets worse. Government feifdoms fight to protect their turf and to avoid close inspection.

The new financial reforms being considered don't even address Fannie and Freddie which are probably bleeding more cash than any other government operation -- it would be good to know to what extent corruption and waste are causing the bleeding, but all heads are turned and there's no will to tackle the issue -- too many powerful politicians have their fingerprints on Fannie and Freddie.

When you combine waste and fraud with corporate welfare and redundancy, a clearer picture forms of where to start to get the government financial house in order. Commissions to study the problem and offer recommendations haven't worked, but you would think that if there's a bipartisan issue capable of gathering unanimous support, this would be it. What hope do we have of creating fiscal sanity and efficiency in government if we can't even cut waste, fraud and redundancy? This will have to become a top election issue from now on, and any politician who can't promise and cross his/her heart, and have a specific plan, to tackle waste and fraud has no business even running.

Update on Saturday, July 10, 2010 at 09:07PM by M. Farmer

http://weeklystandard.com/articles/one-job-forward-two-jobs-back?nopager

Ezra Klein is trying his best to not get it

http://voices.washingtonpost.com/ezra-klein/2010/07/why_are_corporations_sitting_o.html

Pressed on the subject, Donahue allowed that fears of further market turmoil and insufficient consumer demand were also players in business decisions. At this point, Pfeffer offered a useful addition: Businesses are herd animals, he said. They tend to spend all at once and hoard all at once. So the fact that many of them are hoarding now is convincing the rest of them to hoard now, and the question is how you break that cycle so a few major players step out and invest and make their competitors feel like they'd be missing out if they didn't do the same. But that sort of change requires some positive shock -- great jobs data, say -- and it's not clear where that'll come from.

I laughed when I read his -- I think Klein is pretty sure where he thinks it should come from -- government spending, another stimulus, "relief". But I will give Klein the benefit of the doubt and assume he's really perplexed.

It will come from government changing direction, eliminating capital gains taxes, letting the business community know that no more drastic changes are in the planning, so that businesses don't have to worry about increases in the cost of doing business. It will come from a government which ends corporate welfare/protection and announces a change in policy which will allow the free market to work in open competition without government interference. This would shock businesses into hiring and expanding, and it would bring in huge amounts of foreign investment.

I hope this resolves the issue so Klein can go forward confident that there's a solution.