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.