Patterico's Pontifications

11/22/2008

A First Look at Obama’s Economic Plan

Filed under: Obama — DRJ @ 6:21 pm



[Guest post by DRJ]

With proposals reminiscent of FDR’s New Deal, Barack Obama used this week’s Democratic radio address to introduce his economic plan for America:

“President-elect Barack Obama promoted an economic plan Saturday he said would provide 2.5 million jobs by rebuilding roads and bridges and modernizing schools while developing alternative energy sources and more efficient cars.

“These aren’t just steps to pull ourselves out of this immediate crisis. These are the long-term investments in our economic future that have been ignored for far too long,” Obama said in the weekly Democratic radio address.”

This is good news for people who want jobs operating heavy equipment, hanging drywall, and installing computer cable. It may also be good news for T. Boone Pickens’ wind farm and moped manufacturers.

— DRJ

41 Responses to “A First Look at Obama’s Economic Plan”

  1. “President-elect Barack Obama promoted an economic plan Saturday he said would provide 2.5 million jobs by rebuilding roads and bridges and modernizing schools while developing alternative energy sources and more efficient cars.

    If you’ll all pardon me… I need to go but CAT and Komatsu stock…

    Scott Jacobs (90ff96)

  2. buy… whatever…

    Scott Jacobs (90ff96)

  3. Does Obama! know how long it takes to build bridges etc. in this day and age?

    Techie (62bc5d)

  4. How do you measure success with a bullshit standard such as “save or create 2.5 million jobs.” I understand new jobs, but how do you measure jobs saved?

    daleyrocks (5d22c0)

  5. All well and good, but the devil will be in the details. I smell a lot of opportunities for political favors and widespread corruption – can you say “Big Dig?”

    Dmac (e30284)

  6. Dmac – THE GOVERNMENT IS THE SOLUTION. I was looking for plans not involving government spending.

    daleyrocks (5d22c0)

  7. Let’s see;how many do the car companies currently employ/Multiplies by square root of negative one,carries the pi .It’s going to work!

    corwin (065dad)

  8. “We’ll put people back to work…modernizing schools that are failing our children…” Obama said.

    Just a quibble, but it is not out of date schools failing children in public education. However inanimate objects are the much easier fix.

    Dana (79a78b)

  9. We’re the government and we’re here to throw money at shit. You name it, we’ll throw money at it.

    O!

    daleyrocks (5d22c0)

  10. Pardon me for asking the obvious…but where is all this largesse coming from? Treasuries are doing the heavy lifting at the moment because of the flight to safety. They are way overbought right now with negative real rates as proof. Panic will do that to people. And then recessions drop tax revenues, so that’s not a gimmee either. Best laid plans don’t always get laid. No matter how much lipstick you put on them.

    Bodes well for the dollar to come back to its underlying fundamentals. Meaning to sell more long bonds to fund these infrastructure projects, it’s going to take raising the yields significantly. That ratchets up the cost of new funds along with trashing the dollar. And just who is going to buy these Treasurys? The global credit contraction has lead to a widespread recession which has thrown the US consumer and Asian exporter paradigm into limbo. We don’t buy as much, consequently they have fewer reserve dollars to buy Treasurys. Plus, several foreign central banks have become heavy gold buyers in anticipation of the demise of the dollar…all the USDs that are sitting on their shelves are destined to shrink in value as the Fed cranks out billions after billions of new currency as bailouts get heaped on top of all the usual deficit spending. So they are using those relatively high value dollars to buy gold, literal tons of it before the US$ won’t buy as much. Debtors eventually tap out when the cost of borrowing precludes it.

    The bright side is once the forest fire clears out the dead wood, we just might have a chance to start with a somewhat new slate. The less bright side is I don’t think the current politburo elites are capable of abandoning what got us here. I would have been much more optimistic if Fisher at the Dallas Fed was replacing Bernanke. That man knows the score. When Volcker nodded his approval at the bailout I about choked. Down goes Frazier…

    allan (c6e29c)

  11. You would think LA could get a subway out of this. It’s not like we need it or anything. But that’s probably a disqualification. They’ll probably spend it building new buildings for Chrysler.

    Kevin Murphy (0b2493)

  12. They’ll probably spend it building new buildings for Chrysler.

    More like the ones they already have…

    Scott Jacobs (90ff96)

  13. The state of Utah has just canceled ALL road building and rebuilding that has not already been contracted.

    I’d bet other states have done the same. Seems runaway costs have outpriced the available revenue, and since nobody is buying one gotdaamed thing, that stream is drying up as well. Amazing how any govt entity finally get it, when the income stops flowing, so does the commerce and YOUR ability to spend like drunken sailors.

    Our top two employers in this nation are the federal government, average wage, 40 or so bucks an hour + full bennies. Second in line is Wally world, average wage, 9 bucks an hour no bennies. Though I do not know and will not do the research or math, I suppose that real slaves,prior to the civil war, actually made more real income that free citizens of any color can make today! Even if such was NOT in a paycheck.

    BTW way “the one ” says 2.5 million jobs by 2011, today, FRICKEN TODAY! 40 million of us are unemployed! Add the auto industry of another million plus. Who the hell cares about 2.5 over the next 3 years! Who the hell can hire us today!

    Oh and I can run heavy equipment, I can even run a got damed mexican backhoe as well. Don’t desire to, but by gawd will!

    Though I do ot actually know, I’ve a feeling my thoughts are shared by many. Especially those with commitments made when they had an income!

    TC (0b9ca4)

  14. Obama spent two years telling people the economy was the pits because of Bush. He talked down any policy, any idea, any program. Now the market and business and the consumer don’t want to spend. That’s his economic plan. Oh, yeah, tax and spend.

    Bill Dingle (dbe4a4)

  15. _____________________________________

    Since a lot of people, and virtually all Democrats, Obama included, believe Franklin Roosevelt was the nation’s great savior during the Great Depression, I thought the following snippets were interesting.

    New York Times
    By TYLER COWEN
    November 21, 2008

    The traditional story is that President Franklin D. Roosevelt rescued capitalism by resorting to extensive government intervention; the truth is that Roosevelt changed course from year to year, trying a mix of policies, some good and some bad.

    A study of the 1930s by Christina D. Romer, a professor at the University of California, Berkeley…confirmed that expansionary monetary policy was the key to the partial recovery of the 1930s. The worst years of the New Deal were 1937 and 1938, right after the Fed increased reserve requirements for banks, thereby curbing lending and moving the economy back to dangerous deflationary pressures.

    Roosevelt instituted a disastrous legacy of agricultural subsidies and sought to cartelize industry, backed by force of law. Neither policy helped the economy recover. He also took steps to strengthen unions and to keep real wages high. This helped workers who had jobs, but made it much harder for the unemployed to get back to work. One result was unemployment rates that remained high throughout the New Deal period.

    The New Deal’s legacy of public works programs has given many people the impression that it was a time of expansionary fiscal policy, but that isn’t quite right. Government spending went up considerably, but taxes rose, too. Under President Herbert Hoover and continuing with Roosevelt, the federal government increased income taxes, excise taxes, inheritance taxes, corporate income taxes, holding company t
    taxes and “excess profits” taxes.

    When all of these tax increases are taken into account, New Deal fiscal policy didn’t do much to promote recovery. Today, a tax cut for the middle class is a good idea — and the case for repealing the Bush tax cuts for higher-income earners is weaker than it may have seemed a year or two ago.

    In short, expansionary monetary policy and wartime orders from Europe, not the well-known policies of the New Deal, did the most to make the American economy climb out of the Depression.

    Notice the date of the “worst years” of the New Deal is 8 to 9 long, and surprisingly drawn-out, years following the huge crash of Wall Street in 1929, and 4 years following Roosevelt becoming president.

    Also, keep in mind that the 3 states in the US with the highest unemployment rates right now — Michigan, Rhode Island and California — have been and are governed largely by Democrats/liberals.
    _____________________________________

    Mark (411533)

  16. Prepare for the worst, hope for the best. 2.5 mm jobs? Wow! that is impressive! (NOT) Just get government and special interest out of the way and jobs will be created with zero cost to the taxpayer. Unfortunately, the nanny state will not go away during this administration.

    Crapola (f07cb5)

  17. Our guest host wrote:

    This is good news for people who want jobs operating heavy equipment, hanging drywall, and installing computer cable.

    Sure, I’ll love it: sounds like a lot of concrete to be produced! Still, our incoming president’s tax cut promises are still up on his website, as of 7:29 AM EST today. One of us wonders just how The One will be able to do all of the things he’s promised, unless he really can walk on water.

    The Dana who runs a concrete plant (556f76)

  18. Wow! What innovative, advanced thinking we have here. “Create” 2.5 million jobs. And the plan is, tax the crap out of business (where jobs really are created) and the federal government hires 2.5 million people. Isn’t communism wonderful!!

    rick g (a70757)

  19. I am with TC here. I too worry that Obama’s too slow on this economic stimulus. At least he’s stating the obvious that we need a stimulus. Republicans so far just want the Middle Class to die and lower their wages and income…so perhaps the very rich can hire locals at lower wages.

    Unfortunately, Republicans believe in lower wages and most Chamber of Congresses supported illegal immigration and Nafta that destroyed Mexican’s small farms that forced Mexican’s into absolute penury…thus lowering wages in general. (that’s a side light to all the Republican disasters.)

    We have no choice but to give Obama a slight chance to right this sinking ship. But I know Utah, was there this year, and know how one of the lowest unemployment states, a state that benefits from the Military Complex and Orin Hatch’s constantly bringing govt. contracts into the Beehive State…but also that workers in southern Utah are pretty poor and that the economy like elsewhere is lots of low paid jobs like wally world’s and more benefits for the very wealthy (people like Mitt Romney) at the expense of the middle class.

    The intrinsic problem with Republicans is that they want war on the cheap. Bush pushed for a two front war and cut drastically taxes on those who could afford it thus a huge contradiction. Where is the criticism from those here who supported Bush’s tax cuts and wanted more military adventurism? “Freedom ain’t Free!” Indeed!

    The repubs have been washed from power…but I’ll state that Obama seems Clinton-lite, a little too Republican for my tastes. A bigger and faster stimulus is needed to stop the inevitable slide into Depression that is happening. Bush has killed Middle Class demand with his allowing the economy to tank with guys like Chris Cox allowing the bankers unsustainable margins and leverage. But w/ advisors like Larry Summers and Bob Rubin how is Obama much different. (Claims that Obama is a “Marxist” are a laugh when we’re looking at Obama’s economic team.) Obama’s proposal is light years better than the Republican administration’s strongarming Congress to give 700 Billion to Wall Street banks. So he has a good start. (He did say he is responding to the approx. Million and a half jobs lost in the last year…not the current millions of unemployed that are in flux and often not counted…although tc’s estimate seems high now probably in two years of depressive deflation it’ll be tens of milllions…so I wish Obama’s team forsees that probability.

    Hopefully, the economy will right itself as the confidence shown by Obama is already persuading Wall Street the sky isn’t falling…but both parties aren’t aware it seems about the Middle Class’s loss of demand…which means we’re not buying but are saving, saving for a coming downfall….which ironically collectively leads to less economic activity and then less demand and then less jobs and a spiral downwards and a self-fulfilling downfall.

    datadave (c7ddc7)

  20. I see datsdouchenozzle is off its meds … again.

    JD (5f0e11)

  21. Unfortunately, Republicans believe in lower wages and most Chamber of Congresses supported illegal immigration and Nafta that destroyed Mexican’s small farms that forced Mexican’s into absolute penury…thus lowering wages in general. (that’s a side light to all the Republican disasters.)

    One of the principle causes of the Depression that followed the 1929 crash was the effort made by Hoover and Roosevelt to keep wages high. Second were the tax increases that both supported. Third were the “beggar thy neighbor” trade restrictions begun by the Smoot-Hawley tariff. All three seem to be features of Obama’s plan.

    DD has a problem with cause and effect, as usual. Absolute penury drove Mexican peasants to travel to the US for better jobs, not the other way around. No surprise to find a lack of economic sense in a lefty. To blame NAFTA for illegal immigration is just looney.

    Mike K (2cf494)

  22. When Volcker nodded his approval at the bailout I about choked. Down goes Frazier…

    Well, I almost puked in the office wastebasket when I heard that one, so I hear you. No wonder he demurred when reportedly offered the Treas. Sec’ty job by Obama – why take responsibility for that ridiculous affront to economic logic?

    Dmac (e30284)

  23. He must have consulted with his advisors and done the calculation carefully to come out with this number. At least he is a true believer of Lincoln’s principles – “Government is of the people, by the people, for the people.” We need to rebuild and repair our infrastructure that is long overdue. At least, he is much better then just empty word – “My friends, I know how to do this…”.

    Charles (a136f5)

  24. Charles, you really are being quite silly. This is nothing but empty words. Consult to come up with this bogus number? Right. And just which of his “advisors” do you ascribe this economic hooey to?

    SPQR (26be8b)

  25. Merry Christmas America! Courtesy of the Bush Administration and the wonderful Compassionate Convervative Republicans in Congress. We and BO are going to need a miracle to turn this Republican mess around. Those people aren’t fit to govern out of a brown paper bag. Sheesh!

    Paul in Miami (60ddc2)

  26. Ah.. and the Golden Calf shines his true light.. Unfortunately, the jobs he’s “creating” will all be government contract jobs… Say it with me kids… HALIBURTON. Spend, spend, spend… after the contracts are complete, the jobs are gone – illegal workers will have made their $3/hr and the corporate fat cats will have gotten richer. But.. if you’re not into construction or factory work (for meager pays) we’ll have that $1k stimulus check to live on!! What I’m not seeing come out of this are new businesses that will hire people to work for them long term – the work or the money to pay for these “projects” will run out fast. It’s starting to seem that the only change that we are looking at is perhaps Bush with a sun tan?

    DM in Philly (56da89)

  27. You got to have faith. Nothing changes ovenight and this problem wasnt created overnight. Stop listening to the evil whispers…Things will be fine. Be OPTIMISTIC..

    Patrick (e3caa6)

  28. Paul, just why is it that you are so clueless?

    There is no Bush administration policy that you can point to that created the current financial crisis. Absolutely none. The Bush administration did not create the housing bubble nor cause its collapse. The Bush administration did not create the Mortgage Backed Securities markets instability through bad credit ratings nor did the Bush administration put the Democratic cronies like Johnson, Raines, Gorelick and Barney Frank’s boyfriend in charge of the Fannie Mae agency. The Bush administration did not encourage via the CRA the issuance of poor credit risk loans, policies dating to the Clinton administration.

    Note that if this was a Bush administration policy problem, the British, French, Germans, and Dutch would not be bailing out their banks. Nor would the entire nation of Iceland be bankrupt to the tune of many multiples of their GDP.

    Grow up, Paul. This mess is more a Democratic mess than a Republican.

    SPQR (26be8b)

  29. Shhh, SPQR, don’t spoil Paul’s bubble. “Europe” is a magical land far from any want and need, untainted by the dark machinations of Bush and his NeoKKKon war on the middle class.

    Techie (62bc5d)

  30. Pessimists!

    love2008 (1b037c)

  31. “You would think LA could get a subway out of this. It’s not like we need it or anything. ”

    You used to have a streetcar. But now its all about supertrains. And this time we wont sell them off to detroit so they can rip them up.

    imdw (7c85b9)

  32. datadave wrote:

    Republicans so far just want the Middle Class to die and lower their wages and income…so perhaps the very rich can hire locals at lower wages.

    Unfortunately, Republicans believe in lower wages and most Chamber of Congresses supported illegal immigration and Nafta that destroyed Mexican’s small farms that forced Mexican’s into absolute penury…thus lowering wages in general. (that’s a side light to all the Republican disasters.)

    Let’s see, under which president was NAFTA signed and approved by Congress? And just what party controlled both Houses of Congress at the time?

    Back in the 1970s, a fine gentleman by the name of Cesar Chavez tried to unionize migrant — read: Mexican — farm workers, and there was a big push to buy only vegetables picked by unionized labor. That failed, rather spectacularly, because people. not Republicans and not Democrats, but plain ordinary consumers, chose to buy the lettuce that cost less.

    The meme that the Republicans want to destroy the middle class is simple Democratic propaganda; the middle class is the source of most Republican votes!

    The realistic Dana (556f76)

  33. Mike K wrote:

    No surprise to find a lack of economic sense in a lefty.

    I’ve used it as a blog tag-line before: if liberals really understood economics, they wouldn’t be liberals!

    The blogger Dana (556f76)

  34. “Nothing changes ovenight and this problem wasnt created overnight.”

    A lot of truth here. It took the Democrats being in charge of the government nearly 2 years to create this mess.

    rick g (a70757)

  35. Great idea! Government programs, what could go wrong?

    Patricia (ee5c9d)

  36. Obama’s rebuilding infrastructure plan is a lot of hooey. These kinds of projects take years to plan and build and will do nothing in the short term to help the current financial crisis. If government would just get out of the way, good old American capitalism will solve the problem just as it’s always done. And for God’s sake, let the auto companies declare bankruptsy and reorganize, getting rid of, or at least taming what has ruined them in the first place, namely the UAW.

    jwarner (0a2a75)

  37. The Annointed One’s “Plan” is “I’ll create 2.5 million new jobs”. Beyond that, he’s a little short on details, so as one might say “Just What Is The Plan Stan?. We haven’t heard what it is as yet, but the libs are already ecstatic that Salvation Is At Hand.

    I mean what the heck, he can create those new jobs with his left hand while stopping the rise of the oceans with his right hand. I believe, I believe, I err…doesn’t quite work for me.

    Mike Myers (31af82)

  38. “the middle class is the source of most Republican votes!”

    what votes? I guess you mean southern white men or small business owners who think it’s their god given right to cheat on taxes and keep wages as low as possible.

    sophmore spqr above also said that GW Bush with a Republican majority in the House and Senate couldn’t do a thing to stop creditors ringing up usurous rates, using 30 to one margins to buy insecure treasuries and ring up huge profits for no work. GW Bush Gloried in the SubPrime housing movement saying it’s wonderful his administration has put a higher percentage of Americans into homes as owners than any other..Opp, not any more. Blaming it on Fannie Mae is a big lie. All the mortage banks at the wall street level were doing it and pushed Fannie to do it too. The reason Democrats were defending Fannie Mae was that Republicans were trying to destroy it’s GSE status and make it less transparent and to operate more like ummm, Citibank or AGI or Lehman or…..a more corrupt private unregulated entity. Fannie Mae only guaranteed other more Republican types of businesses that were writing up unscrupulous loans etc. and bad insurance policies like JD is involved in. This is much bigger than a few hundred billions of bad housing mortgages it’s about unscrupplous Wall Street shenanghans by both Rep. and Dem. …..who have decimated American savings for most people one way or another.

    Besides the structural problems we’re dealing with are much bigger than the foreclosure problem.

    datadave (2f8af0)

  39. whaz up? can’t take the heat. my other email was blocked.

    datadave (3ad671)

  40. So 2.5 million jobs. At an employment cost of 50k to 75k that means taking an additional 125 billion to 187.5 billion from taxpayers to fund this.

    That’s billions of dollars that could have been more efficiently spent by the people who earned that money.

    Kalroy

    Kalroy (62528b)

  41. I think that one infrastructure project that President Obama should consider is the Trans-Global Highway, proposed by Frank X. Didik a number of years ago. Didik, if you recall, was the founder of the Electric Car Society, in the early 1980’s and has been a strong advocate of electric cars for years. According to Didik, the proposed “highway”, which would contain roads, rail roads, water, oil and gas pipes as well electric and communication cables. The highway would use and standardize the existing road networks and build new roads as well as a number of key tunnels. Interestingly, the longest Tunnel in the proposal, would still be shorter than the longest existing tunnel today. It would seem that there are many advantages to the construction of the Trans Global Highway including vastly lower cost and faster shipping, better allocation of resources, the ability of utilizing raw materials and much lower carbon emissions, than the existing transportation system. The highway would open up a new era of international cooperation. The Trans-Global Highway site is located at http://www.TransGlobalHighway.com

    Dave (bb378d)


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