Whatever the U.S. long-term infrastructure needs may be, we will not pull this economy out of its hole with a bunch of government public works projects. The question is: Did Mr. Obama’s economic advisers tell him that?
If they did, that wasn’t what he told the American people last Saturday after meeting with his 20-member advisory team. Instead, he went before the TV cameras and called on Congress to move ahead on a so-called “stimulus” package hatched by House Democrats that has very little if any economic stimulus in it. A better name for it would be a “status-quo” plan.
Here’s some of what this plan contains: a 13-week extension of jobless benefits, more money for food stamps, and billions in federal infrastructure projects and funding for state Medicaid costs to help poor-to-low income people. There was also maybe $50 billion for cash-strapped automakers to encourage them to build more fuel-efficient vehicles. But no one argues that will create any new hiring anytime soon, if at all.
For argument’s sake, let’s say all these things need to be done, but they will not, in and of themselves, create a single job, expand production and boost U.S. exports in the global economy.
Infrastructure spending has failed just about everywhere it has been tried. Ask the Japanese who poured billions into public works to pull itself out of its last, long recession, but without much success.
Ask Barack Obama’s chief economic adviser Jason Furman who told Congress in January that infrastructure spending was a very inefficient and ineffective economic stimulus tool. Why? Because by the time the money is appropriated, makes its way through the government’s bureaucracy, then through state channels to contractors and then toward implementation, the recession is usually over or ending.
And who will decide which infrastructure spending will get funded? You can bet the farm that lawmakers will have a long laundry list of local pork-barrel projects of dubious value will get stuffed into the spending bill under the guise of a “stimulus.”
If any of Mr. Obama’s advisers told him the stimulus plan, along the lines of the one the House approved Sept. 26, wouldn’t produce any short-term stimulus, no one would say. But then, some of his advisers are the last people on Earth you would seek out for financial advice.
There was Michigan Gov. Jennifer Granholm standing to Mr. Obama’s right. She is not a doctor but practices the economic equivalent of bleeding the patient, as when she raised taxes on her state’s anemic economy as it was sinking into recession. Unemployment there is 8 percent.
Nearby was former House Democratic whip David Bonior, a fierce foe of any trade agreement, especially the North American Free Trade Agreement (NAFTA), who could become Mr. Obama’s labor secretary, handing the AFL-CIO just about everything it wants.
Still, in the pantheon of anti-trade desperadoes, Mr. Obama is second to none. He opposed trade agreements with South Korea and Columbia, voted “no” on the Dominican Republic-Central America Trade Agreement, and sought to impose tariffs on goods from China if it didn’t readjust its currency exchange rate.
All to curry favor with the AFL-CIO, which poured tens of millions of dollars into his campaign. But others on Mr. Obama’s “team of economists can explain why these positions were wrong-headed. Economic nationalism is not in the national interest,” writes Harvard economist N. Gregory Mankiw, an adviser to Mitt Romney in the GOP primary campaign.
Indeed it isn’t. Economic recovery will require having all our oars in the water, pulling in the same direction at once. It won’t be fixed with a stimulus package that does not create any new jobs in the months to come, or that raises taxes on the engines of job growth: businesses, investors, venture capital and entrepreneurial risk-takers - and certainly not by slamming the brakes on opening new trading markets for America’s manufacturers.View Entire Story
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