Economic Literacy - Stick With It

Now that we’re all enthused about economic literacy, let’s stick with it. It’s fun folks. Come on! Mark the next FOMC meeting on you calender (8/10). Get excited! Tell the kids! Sit down at dinner tonight and say, “OK, that’s it. We’re sick of being treated like dummies when it comes to things economic, and, we’re not going to take it anymore!” Good, that’s a start.

OK. Now. Have we been hoodwinked by the pres? Would he lie to us? Let’s see.

Mike Boskin is a prof of economics at Stanford. Bob Barro is a prof of economics at Harvard. Lee Ohanian is a prof of economics at UCLA.

Boskin starts out for us in an easy-to-understand bit in today’s WSJ, entitled Obama’s Economic Fish Stories. “..Obama says ‘every economist who’s looked at it says that the Recovery Act has done its job.’” Boskin’s response - “That’s nonsense.”

Boskin continues, and again, with up front, simple stuff for all of us: “The stimulus bill is mostly a tragic waste of money ..... the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring." Right.

Bob Barro, after exhaustive research,offers this: “The projected effect on other parts of GDP (consumer expenditure, private investment, net exports) is minus 180, minus 120, +60, minus 330, minus 330, which adds up to minus 900. Thus, viewed over five years, the fiscal stimulus package is a way to get an extra $600 billion of public spending at the cost of $900 billion in private expenditure. This is a bad deal.” Right again.

Finally, Ohanian’s research indicates that gov’t stimulus cannot be stimulus at all, by any definition. We have reflected Lee’s view earlier - where in the world does the money come from? From the grasp of private enterprise. Barro’s research dovetails with this.

Aren’t you just a tad pissed that BO threw all of your $ down the john? Just a tad? And doesn’t all of this make a lie out of every word BO uttered about the stimulus heist?

And now Obama threatens to allow the Bush tax cuts to expire. His own eco adviser Christina Romner notes in the most recent issue of the American Economic Review what any fool knows, that "tax increases are highly contractionary . . . tax cuts have very large and persistent positive output effects." Their estimates imply the tax increases would depress GDP by roughly half the growth rate in this so-far-anemic recovery.”

Better listen up Obama.

Robert Craven