Shopping with Maxed Out Credit Cards

My Forbes column is up this week and it presents some quick reactions to the Obama jobs speech last night.  A brief excerpt:

Overall, I found the package to be an incredible mish-mash of already tried and failed steps to rejuvenate the economy.   Even if I were to buy into the Keynesian stimulus logic, everything in this package is so under-scale as to be rounding errors on the larger economy.  This is basically a smaller version of the last failed stimulus repeated.

This plan is absolutely in the Obama style, offering goodies to many constituencies without a hint of how they will be paid for.  Presidents often offer a chicken in every pot when they are campaigning, but usually are forced into reality once they enter office.  Not Barack Obama.  Time and again, from health care to the most recent budget fight and last night’s speech, Obama wants to be loved for offering perks, and then wants someone else to take the fall for the unpopular steps required to pay for them.  He is like grandma endearing herself to the grandkids by buying them Christmas presents on dad’s maxxed out credit cards, leaving dad to later figure out later how to pay for them or face the ire of the kids by returning the gifts.


  1. Dan:

    I think you're on the right track in your response to last night's speech, though it's unfair to single out Obama when every president in my lifetime has made all kinds of unpaid-for promises (and all contributed to the massive rise in the U.S. debt since I was born over 40 years ago). Obama's just following the script.

    As far as unpaid promises goes, this one doesn't seem big enough to have much of an effect, and is pretty much more of the same. What I've read from business owners is that they won't hire unless they see more demand. Just getting a payroll tax credit won't be enough.

  2. Jim:

    Ron Paul 2012

  3. steve:

    Here is a theory I read in the comment section of a blog.

    "The Democrats are correct when they say that most Republican politicians care more about the re-election then the economy. Where Democrats are mistaken is that most Republican politicians really do believe their own speaches when they say that fiscal stimulus is useless in reviving and even harmful to an economy."

    If this theory is correct, then I should be able to predict the outcome of the stimulus battle.

    The prediction:

    The Republicans will fight mightily against it so that they can win their primaries. Then those in the safest seats will take one for the team and cave at the last minute. This has two benefits. They believe it will make the economy worse for the 2012 presidential election, and Obama won't be able to use it as an excuse for the lousy economy during the elections.

    Unfortunately, this behavior doesn't contradict the standard Libertarian theory that Republicans as a rule like big government as much as any Democrat, could care less or are simply ignorant about the economy, and just say those things to get elected.

    Oh well, I thought it was interesting.

  4. Paul:

    YOur Forbes article has made it to the front page of Google News, I'm sure you'll be pleased to know.

  5. James H:

    "... it’s unfair to single out Obama when every president in my lifetime has made all kinds of unpaid-for promises"

    It's totally fair, as Obama is in charge right now. I don't care who has made what promises in the past, Obama is making these promises now and is accountable for them. Does some previous president's bad promise in the past give future presidents complete freedom to do the same without it being pointed out?

  6. Dan:

    James H,

    I agree to some extent. On the other hand, the biggest reason this country is in trouble now is because of all those unpaid-for programs presidents promised in the past. Obama's just added to it.

  7. Ted Rado:


    You are right. Many presidents in the past have run up the credit card charges. When will we get a president and a congress with balls enough to tell the voters that the freebies must end? It seems easier to play along and let the next crop of politicians face the music. Such irresponsible behavior I would never have imagined.

    If you did this as a private individual, you would be bankrupt and possibly in jail. As a politician, you can get away with it and pass the problem on to later time. Guess what? That later time has arrived. We're screwed.

  8. sch:

    It certainly accomplished one thing, guarantees strong support by the
    teachers unions with the $50B bone thrown to 'support teachers and
    education'. Doubtless some of the FOP might be inclined to help a bit
    with the $5B for police. Both of these appear to be direct salary
    support. Nice quid pro quo.

  9. me:

    I won't call the proposal disappointing, because I honestly didn't expect any better of our President. He's in good company - none of the candidates other than hopeless libertarians have anything resembling a program that might just improve matters if executed with some degree of faithfulness.

    Reduce friction to existing businesses, remove protectionist barriers to entry, never intervene with tax moneys to extend the half-life of businesses that have proven corrupt and help fund ventures through readily available reasonable lines of credit would be my idea of a way forward.

  10. Tom Nally:

    Any government program designed to "create jobs" will have no measurable net effect unless it involves divestment of power from the public sector back to private actors. (And believe me, divesting themselves of power is not why the elected class goes to Washington.)

    I don't doubt that a government program can create "visible" jobs. Hell, anyone can create one or more visible jobs by taking resources that don't belong to them!

    The question has always been this: can government spending create NET jobs? Net, net, net. I say no. The government can only get resources by taking them from the private sector, but it cannot use them as efficiently as the private sector. (If they could, the private sector would be outsourcing business and manufacturing processes to the federal government!)

    Except in extremely unusual circumstances, government spending destroys both net wealth and net jobs. I don't see how any other outcome is even possible.

    ---Tom Nally, New Orleans