President Obama Turns to Austrian Economics
Posted by Michael A. Kamperman on February 15, 2011
Forget Keynes, he is so yesterday for the Obama White House. The President has ditched stimulus spending to revive economic growth in favor of deficit reduction. He is out Hoovering President Hoover. The only thing currently unknown is if the transformation is due to a lack of intellectual gravitas on the part of the President and his advisers, or due to a lack of common sense, or due to a shrewd political calculation to get the President into the center for the 2012 elections at the expense of students, the unemployed, and the poor. What is certain is that this White House won’t be fighting for more aid to the states, for more aid for the unemployed, or for more aid for the housing market. The states will be making massive spending cuts to offset the loss of stimulus dollars this summer. Texas plans to cut billions out of public education potentially resulting in the loss of 100,000 jobs for teachers and administrators. Now, on top of those cuts are even more cuts from the federal government. The Obama Administration has nothing meaningful for job creation in his budget and he has bought into the argument that unemployment is a structural problem. Finally, the White House is proposing to reduce the role the federal government plays in supporting mortgages from 90% of the market to only 10% of the market over the next 10 years. They have lost their housing mind.
The President has embraced the argument that its only private sector export jobs that really matter. He has embraced the argument that a country with a fiat currency that owes everyone dollars should run an economic policy akin to a country on the gold standard. He has embraced what’s good for global corporations at the expense of what’s good for small businesses and for workers.
The Great Depression ended from the largest Keynsean stimulus experiment ever called World War II. We do not need a war for the federal government to put everyone back to work. History has proven this is the way to go. The arguments the President has embraced were the same arguments Hoover embraced in the early 1930′s. It is well known the Great Depression entered a second major economic slump after President Roosevelt decided it was time to balance the budget in 1937. The White House is well acquainted with this history. Therefore one must conclude that the President and those around him care more about his re-election than anything else. If any of his advisers were willing to do what is right for America they would resign. Christina Romer resigned, now we know why. President Obama will find out the hard way in 2012 that the public cares more about jobs than about deficits. Just ask Hoover historians.
