I was happy to read that President Obama is seeking a freeze on government spending, excluding military and entitlement spending.
Enacting this freeze would save $250 billion over the next ten years. That’s a drop in the bucket, but it’s the exact right thing to do at this time. We need some measured deficit spending during a recession to even out the economic cycle. The key is to cut off the deficit spending when the recession ends and, just as the Fed is supposed to do, take away the punch bowl just as the party gets going.
By proposing a modest reduction in projected deficit spending, Obama signals he is concerned about the deficit. He will have to get the government to follow through with serious deficit reduction when the economy begins to expand. For this moment, though, a modest cut in projected spending is exactly what is called for.
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I'm not gonna say this is a spot-on analogy, but if you have a criminal who is mugging and killing people, and he decides to only main a couple instead of killing them, would you feel like applauding his restraint and compassion? If so, I'd love to be a politician in your voting bloc...
ReplyDeleteGoing from horrible to slightly less horrible doesn't score many points for Obama, in my opinion. Plus, if you read the fine print, it's actually not even a real spending decrease at all, which makes it pure political BS. What's the saying, "fool me once, shame on you; if you're a laying sack of s*** over and over and over again and I still believe you, ..."
I think deficit spending in a true recession is a good thing. The trick is to shut off the deficit when the expansion returns.
ReplyDeleteSo spending accompanied a token acknowledgment that at some point restraint will be necessary is the right policy IMHO during a recession.