Filed under: Capitalism, Democrat Corruption, Economy, Politics, Progressivism | Tags: 1.8% Growth, Keynesian Economics, President Barack Obama
President Barack Obama was in New York on Thursday, addressing Democrat donors. According to CNS News, Obama said:
Deficits are not the only thing that could mortgage America’s future, President Barack Obama told Democratic donors in New York on Thursday. He stressed that if government does not spend money in certain areas, it would be mortgaging the country’s future.
“I’m not going to sacrifice investments in education. I’m not going to make scholarships harder to get and more expensive for young people,” Obama said to a cheering crowd. “I’m not going to sacrifice the safety of our highways or our airports. I’m not going to sacrifice clean air and clean water. I’m not going to sacrifice clean energy at a time when we need to free ourselves from dependence on foreign oil, and folks are getting killed at the pump.”
In other words, damn the torpedoes, full speed ahead. Our Presidential spendaholic wants to keep right on spending on all the things that haven’t worked, aren’t working, and will not work.
— Austan Goolsbee, the chairman of the Council of Economic Advisers, said that a slowdown in government spending was mostly responsible for the only 1.8 percent growth in gross domestic product between January and March, down from 3.1 in the fourth quarter of 2010. Goolsbee said in an interview on Bloomberg television:
It was an expected slowdown. The biggest driver was a reduction in government spending at the federal level, a big negative from defense spending.
Nobody likes a growth slowdown. We’ve got to have faster growth, but 2011 and 2012 are still looking fairly positive.
— Financial Times reports that “Doubts have been cast over the strength of the U.S. economic recovery after output grew at an annualized rate of only 1.8 percent in the first quarter. A surge in oil prices held back consumption growth while public spending fell at every tier of the U.S. government.”
At this stage of a recovery, growth often rebounds by between 4 and 5 per cent. Expansion of less than 2 per cent will not create enough jobs to keep up with population growth and cut the US unemployment rate of 8.8 per cent.
The dollar fell further on release of the growth numbers as investors judged that weak growth would cause US interest rates to stay lower for longer.
Initial claims for unemployment insurance climbed to 429,000. Bad news all around.
— The Wall Street Journal was unenthusiastic:
For three long years, the U.S. has been undertaking an experiment in economic policy. Could record levels of government spending, waves of new regulation and political credit allocation, and unprecedented monetary stimulus re-ignite growth? The results have been rolling in, and they represent what increasingly looks like an historic mistake that deserves to be called the Keynesian growth discount.The latest evidence is yesterday’s disappointing report of 1.8% in first quarter GDP. At this stage of recovery after a deep recession, the economy is typically growing by 4% or more as consumer confidence returns and businesses accelerate investment as their profits revive. Yet in this recovery consumers are still cautious and business investment remains weak.
Our spendaholic president has engaged in the greatest spending binge since World War II. He did everything that the Keynesian rule book said politicians should dump into the economy: $168 billion in one-time tax rebates, then $814 billion in spending over 2009-2010, cash for clunkers, an $8,000 home buyer tax credit, the Detroit auto bailouts, billions for green jobs, a payroll tax cut for 2011, and near-zero interest rates for 28 months and Ben Bernanke’s ‘quantitative easing’. And growth is 1.8%.
Deficits this year are estimated to hit $1.65 trillion. How many more trillions does the Keynesian rule book call for?
A Washington Post/Pew poll conducted April 21-25 asked respondents whether they think the federal budget deficit is a major problem that must be addressed now, when the economy improves, or not much of a problem.
A major problem that must be addressed now — 81%
When the economy improves —14%
Not much of a problem — 1%
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