The policy problem with the Obama Administration's silly political gimmick - the spending freeze - is that it basically accepts the idea that there is an immediate need to cut government spending when in fact there still remains an urgent need to increase government spending to spur our stagnant economy. If we were to treat the proposal seriously, and the Village will, then the Obama administration has completely undermined the chances for effective policy to address our economic woes. Mark Thoma writes:
[This] political trick [is] likely to backfire. How will this look, for example, if there's a double dip recession, or if unemployment follows the dismal path that the administration itself has forecast?
As one deficit-hawk journalist of my acquaintance says this evening, this is a perfect example of fundamental unseriousness: rather than make proposals that will actually tackle the long-term deficit--either through future tax increases triggered by excessive deficits or through future entitlement spending caps triggered by excessive deficits--come up with a proposal that does short-term harm to the economy without tackling the deficit in any serious and significant way.
The fundamental problem of our government's fiscal structure is that the rich (individuals and corporations) are undertaxed. The Obama Administration's sell that the problem is government spending, not the undertaxing of the rich, is a terrible mistake. Both in terms of policy and politics.
Speaking for me only
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