I just finished listening to President Obama speak at Georgetown, and I couldn't help but marvel at his political acumen. He is well aware of each and every criticism and he takes them on directly. On the budget, on his priorities, on deficit spending, he acknowledges the criticism and then challenges each and every one of them. He also was able to sum up how we got here rather simply succinctly and impressively considering that he summed up seven years in five minutes.
You also can't help but marvel at the president if the president were a venture capitalist. He sees a vision of a green economy. In his vision, he sees wind turbines, solar panels, and hybrid cars. If he were presenting this vision in the context of a new company, I would most certainly want to invest. Except, he doesn't present this vision as a venture capitalist but as president. As such, his vision is not inspiring but scary. He will attempt to will the economy to create green jobs and industries whether the market wants them or not. He will NOT spend his own money to do it, but ours.
The president also continues his ever more annoying habit of creating a straw man. He justifies his massive spending increases by saying that everyone agrees that at times like these the government needs to spend more. After all, if families are spending less, someone needs to fill the vacuum. This is ridiculously disingenuous. Hundreds of economists disagree. It is in no way a settled matter that government must increase spending during times of economic downturn. In fact, travel back to history and you will find an example of a government that cut not increased spending to help the economy. Warren Harding cut spending and taxes and maneuvered the economy out of a recession in 1920.
The president also again continues to engage in economic fantasy. He thinks that if we only have more green jobs, affordable health care, better education, and more regulations that somehow the rules of economic cycles will cease to exist. He laid out a vision in which there was no more speculation, speculative markets, and boom bust economies. I hate to break it to the president but those are unfortunate but all too real parts of economic cycles: affordable health care or not.
The most troubling part of the president's speech was his consistent use of fuzzy math. He again repeated the canard that he has identified $2 trillion in savings. This has long ago been exposed as including ending the war in Iraq, which would have ended regardless, and includes tax increases. He used these numbers as the basis of deficit reform that is supposed to present his budget as fiscally responsible. He even claimed that his budget proposal will soon reduce the percentage of the budget that government spending will be. All of this is of course nonsense. He can't have it all. He can't force green economy on a market, health care for all, more education spending, and also cut the budget. At some point, he will have to reconcile all of this and the numbers won't add up.
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