Here’s an interesting interpretation of Winning the Future:
After two years of federal spending to boost the economy, the ground has shifted decisively in Washington: On Tuesday night, the most pressing question was not whether to spend more to create jobs but whether to cut spending, deeply and now.
For the first time in his annual address to the American people, President Obama did not hail a newly passed "recovery act" or call for a "new jobs bill." Instead, he called for a five-year freeze in domestic spending, except for "investments" in education, infrastructure and research.
Republicans went much further, calling for an immediate and unprecedented reduction in non-defense programs that could take more than $100 billion out of the economy over the next few months. Both sides are casting their proposals as the best course for deepening the economic recovery and improving U.S. competitiveness abroad.
But with the unemployment rate still hovering at 9.4 percent, neither the president nor congressional Republicans are offering a clear strategy to create jobs in the short run, economists said, and that is the most critical challenge in the minds of voters heading into the 2012 presidential election. The one initiative likely to have immediate impact is the GOP’s plan for sharp spending cuts, and some economists fear that could push the economy in the wrong direction.
Hours before Obama spoke Tuesday, the House approved a resolution calling for domestic spending to be cut to 2008 levels for the rest of the fiscal year, and Republicans are discussing reductions of at least $60 billion. Cuts of that size would trim domestic programs to their lowest level as a share of the economy in more than 30 years, according to an analysis by the liberal Economic Policy Institute, endangering as many as 600,000 jobs.
"Government spending restraint is vital to addressing our long-term fiscal problems. It just shouldn’t start in 2011," said Mark Zandi, chief economist at Moody’s Analytics, who has advised both Republicans and Democrats on economic issues. Zandi said cuts of the magnitude Republicans are discussing probably would not invite a new recession. But they could push unemployment back into double digits, he said, "taking a very significant risk with this fragile economy."
So? What’s wrong with double digit employment? We almost have that now and nobody seems to give a damn. It certainly wasn’t a big topic last night from either the president, the Republicans or the Teabaggers. This is the new normal. We only worry about GDP now and Mark Zandi isn’t worried about that, thank goodness, so carry on with the freezing and cutting. It’s all good.
I’m not sure how high unemployment has to rise before people feel it’s a big problem again, but at this point I’d have to guess that it would take another five percent. Which means that we are now a country that thinks it’s perfectly fine to have tens of millions of people out of work—while at the same time we are busily slashing spending at the local, state and federal level. Talk about a winning future!
In this instance, the conservatives (and I include the likes of Kent Conrad in that designation) are far more honest than the "centrists" about what this all adds up to. They don’t pretend to care about the unemployed or the students or the people who have lost their futures in this downturn. They are right up front about what this is about—☺confidence fairies:
Conservative economists are less inclined to predict that immediate spending cuts would harm the economy. But they don’t see them as an effective economic tonic, either. At a time when the national debt has surpassed $14 trillion, business leaders and bond market investors are looking to Obama and other policymakers for certainty about tax policy, entitlement spending and the nation’s long-term budget outlook, said Glenn Hubbard, dean of the Columbia Graduate School of Business.
"The right way to do a pro-jobs agenda would be to limit policy uncertainty. We need to put the country on a long-term sustainable path," said Hubbard, who served as chief economist in George W. Bush’s White House. "Businesses fear investing if we can’t get this stuff right. You don’t have to start cutting now. But absent presidential leadership, it’s really hard to see how it gets done."
The view that the U.S. economy would benefit from adoption of a comprehensive deficit reduction plan is broadly shared by policymakers and budget analysts.
"Most economists say if you put in place a credible plan that only took effect once the economy had strengthened, just adopting a plan itself would have positive benefits for the economy right now," said Senate Budget Committee chairman Kent Conrad (D-N.D.).
I happen to have the man who can explain why this is total, complete, utter bullshit right here:
That was six and a half months ago, when unemployment was the same as it is now. (Krugman’s response to the speech is here.)
From what I can tell this is working for the president. I would guess that the country is sick of bad news and just wants more than anything to believe that the president can end all this and that we can get back to the way things were. But psychologically we are starting to adjust to this new normal and that new normal is not good for the middle and working class of this country. (The poor are so screwed they don’t even merit discussion.) In fact, it’s devastating and it’s all happening to benefit the ever more powerful top two percent.
Of course, it’s the top two percent who have the money to fund elections, so there is a logic to all of this. This is Oligarchy and for those who say that it can’t work in a democracy, I think we are seeing just how wrong that is.
Update: It occurs to me that deficit reduction has now joined Tax Cuts for the cure-all for what ails the economy. After all, Kent Conrad has been agitated about deficits when they are small, when they are large, when the economy is booming and when it’s in recession. No matter what the situation, the proper response is always to cut government spending, preferably "entitlements." (Being a Democrat he’ll sometimes give a vague wave toward raising taxes, but it’s never a deal breaker.)