Trump Stepping Into Obama’s Bailout Failure

(EPOCH TIMES article linked in pic above)

I grabbed this from my phone, because it is behind a WALL STREET JOURNAL paywall otherwise (for whatever reason my phone got the text?). Enjoy Art Laffer and Stephen Moore:

  • Obama’s Bad Stimulus Example: Democrats want to repeat the 2009 strategy of paying Americans not to work.

President Trump is negotiating with Congress over a massive stimulus plan to combat the severe economic and financial fallout from the coronavirus. One idea that seems to be catching on is a check of up to $1,200 to be mailed to every American, while Democrats in Congress want paid-leave policies and expanded welfare benefits. These may provide some needed temporary relief for families but are unlikely to help lift the economy. Keynesian stimulus almost always fails, and often makes the downturn worse and the eventual recovery weaker.

Mr. Trump would be wise to learn the lessons from Barack Obama’s $830 billion American Recovery and Reinvestment Act of 2009. In the wake of the housing meltdown and financial crisis, Congress passed the largest stimulus-spending package in American history. The economic spark and job creation were supposed to appear almost immediately, as money flowed into “shovel ready” construction projects. Vice President Joe Biden barnstormed around the country in 2010 promising a “Summer of Recovery” that never came.

One problem apparent from the start was that only about 15% of the money was used for roads, bridges and other infrastructure projects. More than twice as much went to income-redistribution programs such as Medicaid, food stamps and extended unemployment insurance, or to green-energy projects. Remember the federally subsidized “cash for clunkers” auto trade-in program? That sop to the auto industry did little to shore up employment—or even the auto industry. University of Chicago economist Casey Mulligan calls the postcrisis downturn the “redistribution recession.”

The left is now trumpeting the redistributive stimulus as a wondrous success. Mr. Obama even tweeted earlier this year that his stimulus plan laid the groundwork for “more than a decade of economic growth.” But the facts point in the opposite direction. When his stimulus plan passed, Mr. Obama’s economic team predicted above 4% growth each year from 2011 through 2013.

Fortune tellers with tarot cards and Ouija boards might have gotten closer to the mark. On average, growth from 2009 to 2012 was a mere 2%. Two years after the stimulus the unemployment rate was still 9%, and it would have been much higher if not for the millions of Americans who dropped out of the labor force because jobs were so scarce. The plan was designed to help the middle class, but median household income fell through 2011.

In 2015 the Joint Economic Committee of Congress compared the Obama recovery with the previous eight recessions and found that per capita income growth after 2009 was thousands of dollars below the average. The JEC’s conclusion summarizes the legacy of the Obama stimulus: “On economic growth the Obama recovery ranks dead last.”

To paint a rosy picture, Democrats have had to argue that the economy would have been even worse, bordering on a second Great Depression, without all of the spending. Yet their outlook before passing the stimulus exposes that argument as a mere shifting of goal posts. Actual job growth after 2009 was lower than what Mr. Obama’s economic team predicted it would have been without the hundreds of billions in spending. That’s some “investment.”

Then as now, Nancy Pelosi was speaker of the House. Her strategy was, as Mr. Obama’s chief of staff put it, not to let a crisis “go to waste.” The 2009 stimulus morphed into a giant welfare bill—by design. Mrs. Pelosi said back then that spending money on food stamps and unemployment insurance was “fast acting” and “fiscally possible,” and that these programs could deliver a surplus of economic activity for every dollar spent. Magically, paying people not to work was supposed to get more people to work.

Now she is peddling the same economic non sequiturs, hoping to salvage employment while passing two weeks of paid leave for employers with fewer than 500 workers, beefed-up unemployment insurance, and other redistribution programs at a price tag of hundreds of billions of dollars. Democrats even tried to make the paid-leave provision permanent. All this spending will decrease the number of Americans who return quickly to work after the crisis.

Given the current public-health strategy of social distancing, providing cash and in-kind benefits to tens of millions of stranded workers may be a prudent and compassionate approach. But no one should pretend these programs will stimulate recovery. They are likelier to prolong a slump, as the Obama strategy did. President Trump should beware: Another redistribution recession might even ensure that Joe Biden takes his job in November.

A much simpler and more effective stimulus would be a pro-growth tax cut, such as a suspension of the payroll tax. In addition to boosting take-home pay, it would give 27 million small businesses an incentive to hire rather than fire.

Mr. Laffer is chairman of Laffer Associates. Mr. Moore is a senior fellow at the Heritage Foundation. They are authors of “Trumponomics: Inside the America First Plan to Revive Our Economy.”

 

Another Bailout Around the Corner ~ `The Hammer` Was Right!

Economic Laws

✿ “A fundamental principle of information theory is that you can’t guarantee outcomes… in order for an experiment to yield knowledge, it has to be able to fail. If you have guaranteed experiments, you have zero knowledge”

{Editors note: this is how the USSR ended up with warehouses FULL of “widgets” (things made that it could not use or people did not want) no one needed in the real world. This “insurers won’t be losing a lot of sleep over it” (see below) enforcers George Gilders contention that when government supports a venture from failing, no information is gained in knowing if the program actually works.}

Via Gateway Pundit:

This come via the Weekly Standard, but note that Charles “the Hammer” Krauthammer predicted this at the end of last year:

Bailing Out Health Insurers and Helping Obamacare

Robert Laszewski—a prominent consultant to health insurance companies—recently wrote in a remarkably candid blog post that, while Obamacare is almost certain to cause insurance costs to skyrocket even higher than it already has, “insurers won’t be losing a lot of sleep over it.” How can this be? Because insurance companies won’t bear the cost of their own losses—at least not more than about a quarter of them. The other three-quarters will be borne by American taxpayers.
Obamacare

For some reason, President Obama hasn’t talked about this particular feature of his signature legislation. Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies. It’s even worse that Obamacare is trying to coerce Americans into buying those same insurers’ product (although there are escape routes). It’s almost unbelievable that it will also subsidize those same insurers’ losses.

Here, US-RUSSIA talks about some of the key differences between the Russia of today and the USSR of yesteryear:

…But what Russia does not suffer from is what the Soviet Union suffered from: massive economic distortion through state subsidies and outright fiat. The Soviet Union’s policy to contain inflation was not to raise interest rates or limit bank lending but to make inflation illegal. Inflation was banned and prices on a host of important goods were frozen (consumers, of course, paid the increased cost through ever-more-pervasive shortages). The Soviet treatment of unemployment was similar. The Soviet Union sought to lower unemployment not through tax credits or through loose monetary policy but by making unemployment a crime and forcing enterprises to boost their payrolls. Stories abound of Soviet grocery stores that had  four different ticketing systems and ten different cashiers. This sort of inefficiency wasn’t some mysterious manifestation of eastern barbarism, it was an entirely predictable result of Soviet economic policy…

The question is, what is the healthiest direction/pulse of the nation to go? Making market “realities” a fiction, and artificially insulated from what the public wants… thus increasing the government’s involvement (increasing it’s growth and stripping away freedoms in order to artificially prop-up parts of the market) in our personal lives and restricting of choices? Or a free’er market which increases our freedoms and allows products and reforms to be MOST affected and guided by the people?


One last point, the most important. Unlike big business when it makes mistakes, big government cannot go out of business. Unlike corrupt government, corrupt business cannot print money and thereby devalue a nation’s currency. Businesses cannot coerce you by force (tax liens, garnishing of wages, or armed IRS officials, etc) into an action. So the “greed” of the corporation pales in comparison to the greed of government.[6] Which is why our Founders stated that, “The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government” (Patrick Henry); “Government is not reason; it is not eloquence. It is force. And force, like fire, is a dangerous servant and a fearful master” (George Washington). (Read More)

Can We Afford a Bailout for Another Country?

From a story over at CNBC:

A proposal for a second Greek bailout package worth 80 billion to 100 billion euros over three years was taking shape, euro zone sources said.

Merkel, under political pressure at home to avoid being the financial savior for other struggling European countries, said Germany understood its role.

“We’ve seen that the stability of the euro as a whole will also be influenced if one country is in trouble,” she said.

“So we do see clearly our European responsibility and we’re shouldering that responsibility, together with the IMF.” With U.S. unemployment at 9.1 percent, Obama has blamed outside forces for impeding the economy, including high fuel prices, the earthquake in Japan and the euro zone crisis.