You don’t know what you’re talking about!’ cried Humpty Dumpty. ‘How many days are there in a year?’
‘Three hundred and sixty-five,’ said Alice.
‘And how many birthdays have you?’
‘And if you take one from three hundred and sixty-five, what remains?’
‘Three hundred and sixty-four, of course.’
Humpty Dumpty looked doubtful. ‘I’d rather see that done on paper,’ he said.
Alice couldn’t help smiling as she took out her memorandum-book, and worked the sum for him:
Humpty Dumpty took the book, and looked at it carefully. ‘That seems to be done right—’ he began.
‘You’re holding it upside down!’ Alice interrupted.
‘To be sure I was!’ Humpty Dumpty said gaily, as she turned it round for him. ‘I thought it looked a little queer. As I was saying, that SEEMS to be done right—though I haven’t time to look it over thoroughly just now—and that shows that there are three hundred and sixty-four days when you might get un-birthday presents—’
Lewis Carroll, Through the Looking Glass
Somewhat against my better instincts I listened to the president’s speech last night, the prepared text of which can be found here. I thought the tone of it was just fine. I didn’t find it begging or angry as some did. I thought it was hortatory, which was appropriate. I would further point out that anybody who interprets exhortation as anger (or begging for that matter) has a problem. James Fallows notes a relationship to the “call and refrain” mode of some sermons. I think that’s fair comment.
Before I begin any reaction to the substance of the speech can anyone tell me over what period the spending is to take place? I haven’t seen that defined anywhere. I would guess three years. Now let me put my reaction in the form of a word problem.
Question: The economy has a $1.4 trillion output gap. The president has proposed $150 billion per year in additional stimulus spending. Based on that it is reasonable to infer that the president believes
A. The Keynesian multiplier is around 10.
B. Half a loaf is better than none.
C. There’s no chance that the House Republicans will pass this bill in its current form so he may as well rack up some points with his base for proposing the spending he has and give himself a platform to run on in the 2012 elections.
D. Never let a good crisis go to waste.
E. I understood there was to be no math.
Note that the proposal makes no sense whatever unless you believe in the effectiveness of Keynesian stimulus or you believe that the proposal is merely a cynical political ploy.
If the president’s economic advisors are telling him that the Keynesian multiplier is around 10, they are blowing smoke up his skirt.
Reactions from the president’s allies are tending towards B, cf. Paul Krugman’s column. I don’t see how Dr. Krugman reconciles “it would probably make a significant dent in unemployment” with his previous complaints about the inadequacy of the 2009 stimulus. Once the afterglow has worn off will it be followed by a walk of shame?
The speech had barely been made before the AP had already fact-checked it and found it wanting. The analogy that I made some time ago is starting to gain traction: he will gladly pay you Tuesday for a hamburger today.
Mike Shedlock is even more critical, cataloguing the speech’s “lies”, e.g.:
Obama: The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services.
Mish: That is lie number 4. The primary purpose of the American Jobs Act is simple: To keep one person (namely President Obama), in his job.
I am more charitable. I don’t think they’re mostly lies but rather wishful thinking and exaggerations, i.e. campaign promises.
I continue to find the White House’s position incoherent. Does the president really think that his proposal is large enough? That it’s the most he can get with the Congress he has? If he can’t even get what he has proposed, which I think is more than likely, shouldn’t he have proposed even more? He’ll gain more traction with his base by failing to get a $1 trillion stimulus package than he will by failing to get a $450 billion dollar one.
In the end the president’s proposal does not meet the standards I outlined earlier for an acceptable package. It is insufficiently focused. The president is punting on fiscal problems presented by a solution that even if you accept the Keynesian analysis is too small to accomplish objectives other than political ones.