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LAMBRO: Recovery mirage
Better times are always off in the distance
Question of the Day
Everything you ever wanted to know about the Obama economy is in a single sentence about the Federal Reserve Board’s latest attempts this week to deal with unacceptably high unemployment.
“Fed officials projected that the jobless rate, now at 7.7 percent, would not reach 6.5 percent until near the end of 2015 at the earliest,” The Washington Post reported in its lead front-page story on Thursday.
If there’s anyone out there — besides President Obama’s top advisers and diehard allies in Congress — who thinks his economic policies, or lack thereof, will restore a weak economy to its full vigor in his second term, they’ve got a long wait.
Year after year over the course of Mr. Obama’s impotent fiscal policies, the Fed has thrown everything it had at the economy, pumping trillions of dollars in printed money into U.S. Treasury bond purchases while reducing its interest rates to near zero — without much to show for it.
With the “fiscal cliff” now looming more menacingly than ever before, and the economic and jobs data weakening month by month, the Fed is doubling down on monetary measures to breath some life back into the economy in the absence of any serious fiscal plan by the administration.
Yet, with each long-term prognosis report, the Fed’s target dates for a hoped-for recovery recede deeper into the future.
Fed officials are telling us now that they do not expect to see a light at the end of this long, jobless tunnel until nearly the end of Mr. Obama’s second term. Possibly, it won’t happen until a new president takes his place.
Let’s face it, Fed Chairman Ben S. Bernanke has very few monetary weapons left to turn this economy around and he’s said many times that the only real solution lies in fundamentally changing fiscal policy.
That means reducing the massive amounts of capital that the government sucks out of the economy each year and enacting economic growth incentives on the tax side of the equation.
However, Mr. Obama opposes any serious policy changes in that direction. Indeed, he wants to do just the opposite: extract trillions more from a weak economy through higher taxes so he can spend more on waste-ridden programs like his multibillion-dollar clean energy investments. Recently, a battery manufacturer was added to his bankruptcy list failures, this one costing taxpayers $133 million.
Even though Mr. Bernanke’s plaintive pleas for changes in fiscal policies have fallen on deaf ears at the White House, he tried again at a news conference Wednesday when he announced the Fed’s stepped-up goals for the economy.
“If the economy actually went off the fiscal cliff … that would have very significant adverse effects on the economy and on the unemployment rate,” he said. “We would try to do what we could … but I just want to again be clear that we cannot offset the full impact of the fiscal cliff. It’s just too big.”
“The most helpful thing that Congress and [the] administration can do at this point … is to find a solution and avoid derailing the recovery,” he said.
It should be clear that nothing the Fed said it would do is going to change the profound economic challenges we face now or ever. The financial markets’ reaction to the Fed’s actions was a great yawn and stock markets ended the day essentially flat.
Meantime, Mr. Obama continues to live in his own dream world, a hermetically sealed universe in which he insists the economy is doing fine. Speaking to a crowd of several hundred United Auto Workers union members in Detroit on Monday, he said, “We’re moving in the right direction. We’re going forward. So what we need to do is simple — we need to keep going forward.”
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