From Dumb To Dumber
Fiscal conservatives are shaking in their boots upon Obama's announcement that, “Next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits step up. Because I'm calling their bluff.” Didn't this guy “holler” about the deficit all the way to the presidency? How are those deficits looking? I don't think people understand how absolutely insane and ignorant this statement is. This is the guy who wasn't going to raise the deficit “one dime” until the misguided stimulus and health care and those other unaffordable plans he is still trying to push through. If this guy wasn't president his actions would have us all rolling on the floor laughing. This isn't even the worst of it. The president accuses Republicans of playing politics so he calls them out...for next year...after the election. Is Seinfeld writing this script? Democrats hammered home in recent years that respect for the president isn't required. I would like to take advantage of that and admit, our procrastinator-in-chief is dense. During the Bush presidency the media pundits rallied the American people around a storyline where Republicans are stupid. I personally think most people are stupid but there was a very important piece missing from that narrative. Democrats are idiots. Obama may be the Commander-in-Chief but he isn't the only one spouting nonsense. Pelosi is on the record telling Americans that unemployment benefits are an effective job creator. I'm an economist and I understand that she is implying the demand created by the unemployed being able to purchase things pumps money into the economy. I am not against unemployment benefits but this assertion is beyond stretching the truth. It doesn't even pass the smell test. If unemployment benefits were such an effective “job creator” then high unemployment would correct itself. At almost ten percent unemployment with no relief in sight I think it is safe to say Pelosi is making a gross overstatement. Furthermore, if giving people money causes them to make purchases which drives such strong demand it creates jobs then why did we have such an elaborate stimulus? I still remember my check when Bush tried a similar tactic through re-imbrusements, and it lead to lackluster results. People pay off debt and save. Unemployed folks may not have money left over to save, but they still have debt and they have to tighten their belt limiting the ability to significantly drive demand. Finally, those unemployment benefits come from somewhere. They come from taxes or higher government deficits, two things that dampen job creation. There is a window where unemployment benefits can be an economic stabilizer, and outside of that, they can become a drain on the economy. I personally believe the extensions should be paid out of stimulus money rather than authorizing more government.
New York Times pundit Paul Krugman has even more to say on the issue. On July 4th in New York Times, he laments that the senate went home for the holiday weekend “without extending unemployment benefits.” Why? “We're facing a coalition of the heartless, clueless and the confused.” By this, he admits he means Republicans who just want to obstruct the Obama agenda as a political calculation. I admit, I don't know what kind of affect this will have on midterm elections, but I have some serious doubt in Krugman's premise that voting no on extending unemployment benefits creates a Republican windfall. Losing your job isn't a partisan activity. I leave it to you to characterize the move how you want to but Krugman becomes downright disturbing when he actually gets into economics. Jon Kyl stated, “continuing to pay people unemployment compensation is a disincentive for them to seek new work.” Krugman responds saying, “So let's talk about why that belief is dead wrong. Do unemployment benefits reduce the incentive to seek work? Yes...” What?!? That is exactly what Kyl said! Krugman does go on to say that he believes the disincentive is slight and not relevant in such a bad economy, but that doesn't change the fact that Kyl's statement was actually dead right. That makes Krugman, “dead wrong.”
To address Krugman's statement that the disincentive to work is “slight” in a bad economy and thus irrelevant, let's talk common sense. In a bad economy people get paid less. Unemployment pay rates are based on your previous salary. As an example, say you made 40k before you got laid off. You get 20k for unemployment benefits. You are offered a job that pays 30k. Why work 40 hours a week to make 10k extra when you can work 0 hours a week for 20k, or even pick up odd jobs and work off the grid for the extra 10k? It is an honest question people who are unemployed have to ask themselves. Some folks will take the job at recession rates and hope to move up but some folks will also choose to do odd jobs and spend more time on a hobby or some form of leisure activity. The rate people get paid based on pre-recession pay and the salary of post recession employment significantly narrows the gap between unemployment and employment which increases the disincentive to work. This is an important calculation that Nobel Economist Paul Krugman conveniently leaves out.
These are recent examples of three power players among liberals and Democrats. I understand that America voted for change in 2008 but this isn't the change anyone wanted. We've gone from dumb to dumber. We have a president who rode in on a white horse to reduce the deficit, then immediately blew up the deficit. This is the speaker of the house who, in a nutshell, thinks unemployment creates jobs. This is an economist and pundit, providing cover, telling everyone that spending money is the only way to reduce spending. We only thought we had it bad. It's getting much, much worse.
Tyson Bam
July 6th, 2010
