Video: Why go for a Porkulus sequel?
posted at 3:35 pm on January 25, 2010 by Ed Morrissey
Dan Mitchell explains the reason why Barack Obama wants a sequel to Porkulus to pass in early 2010, and it’s not because of the wild success of the original. In the latest of the series of videos for the Center for Freedom and Prosperity, the Cato Institute scholar explains that timing is everything. The normal cycle for post-war recessions lasts 12 months, and we’re already past 24 months in this cycle. The recovery is bound to occur soon, and Obama knows that Porkulus I won’t be credited for a 2010 revival, especially since most of the money got spent in 2009. If he wants credit for rescuing the economy, Obama needs another bill — and another round of deficit spending:
The point about course corrections in economic policy and the timing of their effects is well taken — but in Mitchell’s example, Reagan had to reverse several years’ worth of bad economic policy. Let’s not pretend that Jimmy Carter caused the decade-long ennui in the 1970s American economy. It was Richard Nixon who imposed wage and price controls, a Republican whose Democratic descendants didn’t dare go that far in centralizing the American economy.
Reagan also had the right idea, which was to free the markets from that kind of top-down control and planning in order to generate real, organic economic growth. Obama so far has gone backwards towards a 1970s-style economic approach, which explains in part why this recession has outlasted every other post-WWII recession, and why the recovery will be weak and maybe short-lived.
Blowback
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It’s like the Milton Friedman “Fool in the Shower” routine, only purposeful.
aquaviva on January 25, 2010 at 3:40 PM
Let’s take our lumps and STOP SPENDING MONEY WE DO NOT HAVE!!!
Geronimo on January 25, 2010 at 3:41 PM
Well if that’s the case, then Porkulus II: The Wrath of Con won’t do a damn thing to stimulate the economy. It’ll just add more to the deficit.
Doughboy on January 25, 2010 at 3:42 PM
Reagan and Volcker took a huge risk in letting the economy purge itself via raising interest rates. A simlar purge needs to happen, but poliutical courage is in short supply.
PS: How does Volcker manage to keep his wits working in this administration?
WashJeff on January 25, 2010 at 3:42 PM
A. A shameless attempt to buy people’s votes with their own money.
B. It always worked for us in Chicago.
C. Because their brains have been marinated in socialism for so long they can’t conceive of anything else.
D. All of the above.
cool breeze on January 25, 2010 at 3:44 PM
Um, why?
Employers aren’t hiring.
Businesses aren’t expanding.
Investors aren’t investing.
And while the whole housing bubble thing is still pretty bad, the whole COMMERCIAL REAL ESTATE bubble thing is much, much worse.
We’re in what you call a ‘long recession’
We didnt come out of the great depression until wwii, and that was really only because so many men left to fight, the labor pool shrank, leaving less competition for the relatively same number of jobs
This economy is staying bad until business has a REASON to hire, expand, invest, or grow. As long as taxes are high (and new costly measures like cap/trade and obamacare are in the mix), this won’t occur.
picklesgap on January 25, 2010 at 3:45 PM
Most of us already have! It’s time for that dip stick in the Whitehouse to get with the program.
anniekc on January 25, 2010 at 3:45 PM
I have a slightly different take. Several States need to be “bailed out”…a few of them immediately – like California, for example??? Obama can’t just write Ahnold a check for ten billion; he has to wrap it up in some sort of legislation. That legislation will be part and parcel of Stimulus II.
“I’ve listened. I hear you. I feel your pain (sorry, Bill!) and I realize we must help our brothers and sisters in the less fortunate States…like California and New Jersey and Ohio and Pennsylvania. We must send them billions of your dollars to offset the terrible bad luck they’ve had spending their own money. We need to “do it for Teddy”.
And the worst part? He has the votes to do it.
GoldenEagle4444 on January 25, 2010 at 3:47 PM
Considering a lower base line growth with an increase in dependence on government programs doesn’t exactly inspire confidence in the future.
fourdeucer on January 25, 2010 at 3:49 PM
That’ll be an electoral disaster for Obama. Look at the heat the Dems got for the Cornhusker Kickback and that was a matter of $100 million a year. Giving California a check for $10 billion(even if it’s under the guise of Porkulus II) at the expense of every other state would be the bailout that broke the camel’s back.
Doughboy on January 25, 2010 at 3:52 PM
Barry ain’t going to change. Far as he’s concerned, HE’S ALWAYS RIGHT! Socialist are always of the opinion that they’re programs are what’s BEST for people. If only they could get the STUPID people to realize that. Never mind that socialism has fallen flat on it’s face where ever it’s tried. Cuba is a HUGH economic dynamo, isn’t it? And Venezuela is just around the corner from becoming another Somalia.
GarandFan on January 25, 2010 at 3:56 PM
Let’s rent this bastard out to other countries. At least, the money could help with our national debt. The fool is bored anyway.
nyx on January 25, 2010 at 3:56 PM
I think differently. I think Porkuls 1 went pretty far in delaying a recovery but now Obama sees a possible recovery. What to do to keep the economic blues, Porkulus 2.
Do not make the mistake that Obama has any intentions of helping America.
jukin on January 25, 2010 at 3:57 PM
I noticed a while back that GWB looked a lot like Nixon in his last couple of years. Barry looks like Jimmy Carter redux, only falling at a faster rate.
Vashta.Nerada on January 25, 2010 at 4:00 PM
We are 12 trillion dollars in debt. Businesses are not hiring. 10 percent unemployment.
Live in the real world, Fool and not in some fantasyland you made up. Grow up, Peter Pan.
nyx on January 25, 2010 at 4:00 PM
They will push Porkulus II through as a jobs bill then dare Republicans to vote against it.
farright on January 25, 2010 at 4:00 PM
As Rahm has taught him, O Bomber is looking ahead…He needs to buy electoral college votes and where better to start than to use our tax dollars to bail out California? He would, in essence, be buying the California vote. The same goes for every other big state I mentioned above. They’re all loaded with electoral college votes and he will buy them with our money. “I saved your state; You owe me your vote”
GoldenEagle4444 on January 25, 2010 at 4:01 PM
Ed, recovery isn’t going to happen while the government is actively trying to further damage the economy. Economic activity isn’t operating in a vacuum.
Vashta.Nerada on January 25, 2010 at 4:02 PM
Double dip. Bank on it.
OhioCoastie on January 25, 2010 at 4:02 PM
Democrats are never afraid to spend other peoples’ money.
search4truth on January 25, 2010 at 4:03 PM
When does it become unanimous that Obama and the elites, he has surrounded himself with, have no practical comprehension of reality and in turn no clue about what they are trying to do. Whether you are intelligent and naive or stupid and incompetent, when the results are the same for both, THERE IS NO DIFFERENCE.
volsense on January 25, 2010 at 4:04 PM
No good. The only thing they would pay for is to keep him where he is.
Count to 10 on January 25, 2010 at 4:04 PM
it worked soooo well the first time./s
upinak on January 25, 2010 at 4:05 PM
One dip after Scott Brown’s election, another after November’s elections.
I hope we are talking about the same type of dipping.
WashJeff on January 25, 2010 at 4:05 PM
I don’t think so.
In this context, ‘double dip’ means that GDP is start to recover, but then crash down into another recession.
Count to 10 on January 25, 2010 at 4:08 PM
We’ve seen repeatedly on these pages in HA that most of the Porkulous money has yet to be spent, yet now we are told most of it was spent in 2009. Which is it?
glennbo on January 25, 2010 at 4:08 PM
Oh, absolutely. It’ll drag on through the next presidential election.
a capella on January 25, 2010 at 4:09 PM
depending if there is one.
upinak on January 25, 2010 at 4:10 PM
WashJeff on January 25, 2010 at 3:42 PM
So you’re willing to make your fellow citizens suffer in order to try what Volcker did because “it worked in the past?” Even though, when Volcker tried it, there were upwards of 2 billion people who didn’t participate in the global economy (the Soviets/Red Chinese and their clients) and another billion who were still under the spell of Gandhi family socialism (India). And we won’t get into US client-states (hello, Phillipines) who kept a big lid on economic freedom while taking big military bucks from Uncle Sam.
Point is, there’s a global liquidity glut in which action taken solely by the US would have little to no effect. That is, other than making your populace suffer to pay for the supposed sins of those who took advantage of the global credit boom.
BradSchwartze on January 25, 2010 at 4:12 PM
I should have added the ;-).
WashJeff on January 25, 2010 at 4:12 PM
What good would California’s electoral votes be if buying them costs him every other state(or a majority of them)?
Doughboy on January 25, 2010 at 4:12 PM
OhioCoastie on January 25, 2010 at 4:02 PM
Not while banks are making record operational profits borrowing at near-zero, and lending to the rest of the economy very long.
BradSchwartze on January 25, 2010 at 4:14 PM
The majority of States won’t win you an election. Winning the States with the most Electoral College votes will. Ask George W. Bush.
GoldenEagle4444 on January 25, 2010 at 4:15 PM
You lost me.
My point is that interest rates are artificially low. Maintaining these low rates delays, and maybe even increases the pain, the day of reckoning. I would rather take the pain now than pass it on to my kids and their kids.
WashJeff on January 25, 2010 at 4:15 PM
WashJeff on January 25, 2010 at 4:15 PM
Considering that asset deflation is global in nature, the notion that interest rates are artificially low is highly debatable. The only real way to combat global asset deflation is to get more people to buy cheap assets.
Excessive tightening of credit to “hasten a day of reckoning” that may not even be needed, or to fight a “hyperinflation” that may not exist, doesn’t foster purchasing of cheap assets. Furthermore, it is a great source of social injustice to do so, as anyone who ever lived through the Farm Crisis of the mid-80s can tell you.
BradSchwartze on January 25, 2010 at 4:22 PM
Based on what I have read, our low interest rates are exporting asset bubbles to China and other Asian economies.
I feel it is great source of social injustice to hand kids born and not yet born trillions in deficits to support\maintain a bubble economy.
WashJeff on January 25, 2010 at 4:32 PM
Sounds like my cup of tea!
karl9000 on January 25, 2010 at 4:33 PM
WashJeff on January 25, 2010 at 4:32 PM
I’m not aware of any generation of working-age people who didn’t benefit from previous spending, nor was unduly burdened by the economic mistakes of the previous generation. Even the damage from the Nixon/Ford/Carter years was paid for by the labor of the generation that got affected by it, even if it took until Reagan’s second term to fully realize the economic gains.
BradSchwartze on January 25, 2010 at 4:42 PM
I’m not sure this is the best place to post this, but I just saw this comment and thought it had to be shared with the Hotair community.
-Jeff
This was in response to a question asking how much the government should “allow” us to make in a given year. The fact that the question was asked is scary enough, but the answer is enough to chill my blood. And no, this wasn’t sarcasm. Change we can believe in?
Vera on January 25, 2010 at 4:46 PM
The banks have done very little lending since September 2008. It was this credit crunch (the banks weren’t even willing to lend to each other overnight) that touched off the whole financial crisis. The economy won’t improve substantially until the banks start lending again at historically normal levels.
cool breeze on January 25, 2010 at 4:49 PM
BradSchwartze on January 25, 2010 at 4:42 PM
It seems like your implying there are little to no consequences for over spending.
Are you saying that our current debt of $12,245,872,000,000 and enormouse unfunded Medicare and Social Security obligations will not affect future workers?
WashJeff on January 25, 2010 at 4:50 PM
From what I understand, the banks are lending, but just lending to the government. The fed has provided cheap access to money and the federal government appears to bankers that lending to the government is the safest place to lend. Also, is not the federal government forcing banks to keep more money in reserve? Thus, off-limits for lending.
WashJeff on January 25, 2010 at 4:56 PM
WashJeff on January 25, 2010 at 4:50 PM
Regarding SS and Medicare, if I’m guaranteed ownership of those benefits I’m supposed to get, how come I wasn’t able to inherit my father’s SS benefits when he died before he could utilize them? And if you don’t own those benefits (either your own or your father’s through inheritance), are you really entitled to those benefits?
I’m saying that as long as this nation is able to be a safehouse for investment, as long as we are able to buy/sell/trade, PROTECT that buying/selling/trading, and be able to consistently pay the interest charges on that debt we issue, that the “consequences” for over-spending are limited to the stupid politicians that engage in it.
BradSchwartze on January 25, 2010 at 4:56 PM
If Obama doesn’t take the Massachusetts Miracle as proof that spending and further talk of stimulus are dead as fried chicken, he’s more daft than even I think he is.
DrW on January 25, 2010 at 5:07 PM
SS has zero guarantee of future payments. It is a promise that the Supreme Court has said can be broken if polticians want to. So, in that sense, we could erase around $4T (I’m guessing on this number)of debt right now. I wish it was privatized. I wish I could pass it on to whoever I want.
That interest charge results in higher taxes, so there are consequences for taxpayers.
WashJeff on January 25, 2010 at 5:23 PM
Good point. And heh, I’m in California. Let it fail, these state clowns won’t fix the problem, none of them. “bailing out” is throwing good money after bad, just enabling these A$$hats to keep the status quo. The state unions, the outrageous pensions, they all need to take a BIG hit on this deal. Scary for me, but I am being real here, California is Effed, it needs to crash back to reality, getting other more responsible state’s taxpayers to “bail California out” won’t un-Eff anything.
rant over.
JusDreamin on January 25, 2010 at 5:28 PM
Does this mean that I don’t get a free Cadillac the next time I need one?
IlikedAUH2O on January 25, 2010 at 5:44 PM
I lived through Nixon’s wage and price controls and all his other progressive nonsense. GW went off the fiscal conservative path but he wasn’t anything like Nixon.
chemman on January 25, 2010 at 5:48 PM
Can you imagine how pissed off Obama’s political advisors are right now, that some policy “schmuck” at some libertarian think tank named Cato, just figured this all out.
They’re busted. And Dan Mitchell deserves the credit for it.
ericdondero on January 25, 2010 at 6:43 PM
ED / Allah
The link to the Center for Freedom and Prosperity is WRONG.
it should be http://www.freedomandprosperity.org
NOT .com
Jason Coleman on January 25, 2010 at 7:50 PM
Vera, I’m sure for Jeff, $50K a year would be a huge increase and the top limits of his dreams. I agree, the question and answer are both scary.
PatMac on January 25, 2010 at 8:56 PM
For Obama, manufacturing “credit” for himself is clearly tops on the agenda.
The possibility of doing the unglamorous, actual right thing to defend America economically, while sacrificing all personal recognition, is in no way on this president’s radar.
Edouard on January 25, 2010 at 9:54 PM
That only works when recessions are allowed to work themselves out.
When government jumps in and hammers business, all bets are off on how long a “recession” lasts.
Squiggy on January 26, 2010 at 6:49 AM