Easy Times (9/2/10)

Christina The Hutt departs the Obama regime to return home to Varl, leaving a ringing legacy of the kind of brilliant, capable, informed, forward-thinking economic policy stewardship that is guiding our country in the "right direction":

She had no idea how bad the economic collapse would be. She still doesn’t understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn’t have much of an idea about how to fix things.

What she did have was a binder full of scary descriptions and warnings, offered with a perma-smile and singsong delivery: “Terrible recession. . . . Incredibly searing. . . . Dramatically below trend. . . . Suffering terribly. . . . Risk of making high unemployment permanent. . . . Economic nightmare.”

Anybody want dessert?...

Even now, Romer said, mystery persists. “To this day, economists don’t fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would.” Her defense was that “almost all analysts were surprised by the violent reaction.”

Did I say she was a Hutt?  I should have said Rush Limbaugh's evil identical twin sister.

Speaking as somebody who minored in economics, allow me to say: This ain't Cochrane multidimensional physics.  The U.S. economy was sabotaged by the bursting of a government-induced speculative real estate bubble in order to panic and swindle voters into electing Democrats to unchecked power, after which the latter pursued depressionary statist policies of insanely unprecedented deficit spending and successful or attempted nationalization of the automotive, health care, energy, and financial sectors of the formerly private economy.  Collectively known as Obamanomics, these were the "violent reactions".  The ones the Hutt mischaracterized are "violent reactions" in the same way that people who can't "violently" escape a Category Five hurricane "violently" board up their picture windows and "violently" huddle in storm shelters and "violently" sit on their roofs (if they're still there) awaiting rescue afterwards if they don't "violently" drown.

Bryan Glover was right: When the only tool you're willing to use is a hammer, everything looks like a nail.  Stealing a trillion bucks from the ChiComms and pissing it down all their cronies' fiscal midden holes did nothing for the economy except add a trillion bucks to the national debt, and now the Obamanomics "brain" trust is more lost at sea than the S.S. Minnow.  Not because there aren't [AHEM] "other" economic policies that could be tried and have ALWAYS succeeded in reviving economic growth, but because there's no such thing in liberal minds as statist policies failing.  It all works on paper, on the whiteboard, in the spreadsheets, so it should work in the real world.  And when it doesn't, it CAN'T be THEIR fault; it CAN'T be because socialism doesn't work.  So they blame Us, The People, or they blame "the mess we inherited from the previous administration," or they blame the dog for eating their position papers that proved the success of Obamanomics to the umpteenth decimal point.  And apart from all that, Obamanomics is MORALLY right, Barry damn it, and capitalism is EVIL, so even if their policies don't work (which they'll never publicly admit), the moral imperative must take precedence.  Hence Hogzilla II, Hogzilla III, and calls for IV, V, VI, VII, VIII, IX, X, XI, and beyond.

The problem is never that they're wrong; it's that "rightness" hasn't been pushed hard enough.

They'll never change that blind guide mindset.  But they are belatedly rediscovering the Clintonoid virtues of tactical deception, which explains what would otherwise be anti-Obamunist heresy:

With the recovery faltering less than two months before the November congressional elections, President Obama’s economic team is considering another big dose of stimulus in the form of tax breaks for businesses – potentially worth hundreds of billions of dollars, according to two people familiar with the talks.

Among the options are a temporary payroll tax holiday and a permanent extension of the research and development tax credit, say people familiar with the talks who spoke on the condition of anonymity in order to describe private deliberations.

Permanently extending the research credit would cost roughly $100 billion over the next decade, tax experts said. And depending on its form and duration, a payroll tax holiday could let businesses keep more than $300 billion they would otherwise owe the Treasury.

Once again for the record, any sort of tax reduction by whatever means does not "cost" anything, because it is money that never gets collected in the first place.  And depending upon the economic elasticity of the mode of reduction, federal revenues may not be reduced at all.

Permanent extension of the R&D tax credit (which will only be as "permanent" as they have to let it be until they can recover from November's horrific electoral beating) is fine and dandy, but note what they're NOT considering: permanent extention of ALL the Bush tax cuts, which would be the quickest and most visible, and most powerful signal of the "hopenchange" the REAL economy needs to start on the road towards REAL recovery.

Now, if I may ream on my (by his own admission) less educated and decisively junior blogeague Ace for a moment, a temporary payroll tax holiday is about one step removed from George McGovern's useless idea (which, yes, George Bush emulated in 2001 and 2008) of sending every American a thousand dollar check.  It's useless because it is not stimulative; it is not stimulative because it is temporary.  What you would end up with is the very same sort of situation created by the impermanence of the Bush tax cuts: a flurry of economic activity "while the sun shines," and when the "holiday" is over, the inevitable crash.  There's a reason, after all, why Arthur Laffer is predicting a depression for next year if the Bush tax cuts are allowed to expire.  This is artificial boom & bust policy when what is needed are policy signals of permanent growth-orientation.  It is the seeding of future economic crises to be exploited by the party sliding out of power in the here & now.  As such, it simply isn't credible.

But as a phony baloney plastic banana BS prop, it's something Dems'll take a flyer on.  At this point, it's not as if they have anything more to lose.

And in the mean time, it also makes a nice green curtain behind which to hatch their next tax-hiking schemes:

You could almost ask whose side these animals are on.  It's almost as if they're a race of large gastropods with stubby arms, wide cavernous mouths and huge eyes, who controlled a large empire.

Christina Romer simply didn't bother assuming human form.