Monday, August 30, 2010

As Economic Policies Fail, Will Administration Double Down?

It’s clear from the president’s Rose Garden address today that the administration is fully aware of the significance of the weakening macro trends and associated loss of consumer and business confidence and, more importantly, the loss of general confidence in the administration’s ability to deal with our troubled economic times.

Only a few months ago the president and top economic advisers were out in advance of the monthly Employment Situation report trumpeting the number of jobs “saved and/or created” all the while preparing a forthcoming PR sweep dubbed the “summer of recovery”.

Now with the economy clearly faltering and Keynesian policy junkies like Laura Tyson and Paul Krugman pulling for more government boondoggles while polls and large populous movements appear to indicate a major case of economic stimulus fatigue on the part of American voters, one has to wonder what the administration will do next.

Will they move toward across-the-board tax breaks in order to stimulate without further jeopardizing their standing in the upcoming elections or will they continue to plan targeted policy action like additional housing tax scams and clunker gimmicks?

One would think that with the housing tax credit sham now being generally accepted as failed policy, wasting billions of dollars merely postponing the inevitable while creating more uncertainly and disrupting the natural market clearing process, the administration would move away from targeted stimulus trickery, yet given the president’s statements that the administration is “hard at work” planning a “full-scale attack” on our troubled national economy it’s hard to shake the sense that more Keynesian malfeasance is about be unloaded on us all.

How much more of this flimflam policy can our withering and feeble private economy take?

There are rumors of “new ideas” related to foreclosure prevention, class oriented mortgage refinancing and debt forgiveness action, possibly additional housing credits and even small business tax credits for simply maintain current employment levels but what the economy really needs is less big government command-economy style Keynesian delusions and more real leadership.