In it, Obama advisor Jared Bernstein, an economist with the Leftist Economic Policy Institute and a man who said "Just about everything Paul Krugman says resonates deeply with me..." is quoted as saying:
"Government is the most reliable source of short-term growth, the only part of GDP pulling out its wallet these days. There is a time for budget austerity - this ain't it."Keep in mind whose money he is talking about spending so freely. It ain't the Federal Government's. That company went broke a long time ago. (The deficit this year is on schedule to be well over $500 billion dollars and the national debt is over $11 trillion.)
In case you're wondering just how the incoming Obama administration plans to miraculously prevent another economic blowout, we have this little gem:
The center of any new financial regulation is likely to feature a "systemic risk regulator" (something that Wall Street supports) that sets standards like capital requirements according to the riskiness of a company's operations. While risk taking in the financial markets will be accepted, it will be managed.Let us set aside just now that this necessarily implies a wholesale abrogation of the right of businessmen to manage the company how they see fit. After all, Fascism teaches us that a crisis demands we surrender our individual rights for the good of the collective.
Instead, right now, we'll concentrate on more immediately practical matters. There is no mention of how the Federal government plans to moderate the risks it creates by interfering in the economy. But we need have no fear, the article assures us.
The major split between advisors during the Clinton administration - big government spenders like Reich vs. deficit hawks like Rubin - is unlikely to return. William Galston, a key centrist warrior during the Clinton years, says the party has moved to the left - embracing a more activist federal government - because the facts on the ground have changed. [emphasis added]I pause long enough to let the chill subside over the surface of my skin at the juxtaposition of the words "activist" and "Federal government." Then, I ask: how is the following contradiction to be resolved? A government further to the left than Clinton's will somehow spend less or create an environment more conducive to wealth creation. (Let's remember, Clinton was only constrained after the election of the Newt Gingrich Congress in late 1994.) The article does not explain how this is to be achieved.
I'm also not sure what "facts on the ground" the article's author thinks could change to miraculously alter the inevitable results of interventionist fiscal policy. How the uber-talented Mr. Obama is going to make that work — when it failed everywhere from Italy in the 1920s to Hoover/FDR in the 1930s to Britain in the 1950s to Peru in the 1970s to everywhere outside Hong Kong today — I'm sure I can't guess.
I have a sinking feeling we're about to find out.