If Obama acts on his economic declaration he'll be walking in the footsteps of Herbert Hoover

[Better Believe It]

In the Shadow of Hoover
By William Greider
November 23, 2009

While he was in China, Barack Obama made a bizarre declaration that the US government must reduce its budget deficits in order to avoid "a double-dip recession." The remark was alarming because it suggests the president may not fully understand the country's economic predicament. Deficit spending is a cure for our troubles, not the cause. If Obama follows through and actually reduces the red ink, the Great Recession could be born again with new fury. In an interview with Fox News, the president said: "It is important to recognize if we keep on adding to the deficit, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a double-dip recession." Maybe he didn't mean it. Or was merely nodding to Chinese leaders, our leading creditor, who had scolded him for profligate spending.

Still, his backward logic gave me a chill. If Obama acts on it, he will be walking in the footsteps of Herbert Hoover, not Franklin Roosevelt, and I fear his presidency could be doomed as a result. I know that sounds too strong and brutally unfair, given the president's energetic vision for the country and his early efforts to stimulate economic recovery. But history is often unfair to leaders who do not get their priorities straight and fail to deliver what they promise.

Barack Obama is a towering political talent by comparison, but also has troubling similarities. In an age of limited government, Hoover preached "volunteerism" and worked earnestly to persuade business to cooperate with labor and "do the right thing." Obama's softball approach to the financial crisis reveals a similar reluctance to use government's powers to compel results. Instead of directing bailed-out banks to lend more aggressively, Obama asked them nicely. The bankers blew him off. His economic stimulus was a good start, yet clearly insufficient.

Blaming this on his center-right advisors--Timothy Geithner, Larry Summers, Rahm Emmanuel--is too easy. Obama picked them. He obviously agrees with their reluctance to go full bore in behalf of the real economy. Geither and Summers, meanwhile, are taking victory laps for saving the country. Ordinary citizens wonder what they are talking about. Obama should tell them to shut up with their self-congratulations (better still, he should replace them with more imaginative policy thinkers).

Piling up more government debt is undesirable and involves risk, but it is not as bad as a low-grade depression that would go on for many years without relief. In this crisis, the United States is astride a fundamental disjuncture that only the federal government can repair by borrowing tons of money and spending it--force-feeding recovery, then cleaning up the balance sheet afterward.

Read the full article at:

http://www.thenation.com/doc/20091207/greider2

[villager]

1. predictably un'recc'd by the thumbs-in-their-ears crowd...

n/t

[Better Believe It]

2. Pressure needs to be put on President Obama for a real jobs creating stimulus plan.

Some people are just flat out opposed to that and prefer more tax cuts for the corporations and rich along with cuts in domestic spending programs and so-called entitlements.

They won't like this article.

[Name removed]

12. Deleted message

Message removed by moderator. Click here to review the message board rules.

[DebbieCDC]

3. K&R

[RUMMYisFROSTED]

4. "Deficit spending is a cure for our troubles, not the cause."

Bullshit.

[Naturyl]

5. It cured the Great Depression

Those countries that engaged in the most deficit spending recovered first.

[HiFructosePronSyrup]

6. Spending cured the Great Depression.

There's nothing special about deficit spending.

Obama has already spent huge, historic amounts of deficit spending. You can't just spend for ever, devaluing the dollar in the process, and get out of the hole.

Even Roosevelt kept an eye on the deficit. He cut back on deficit spending several years into the New Deal.

This Obama-Hoover comparison is ridiculous and historically ignorant.

[Better Believe It]

8. Ya just can't give it all to Wall Street. You need to spend it on Main Street!

"Even Roosevelt kept an eye on the deficit. He cut back on deficit spending several years into the New Deal."

Roosevelt did that in 1936 and it led to millions of new layoffs in 1937!

You need to follow your own advice and study history since you're obviously unfamiliar with the New Deal and Roosevelt Administration!

[HiFructosePronSyrup]

9. You've got to do both, which is what Obama's doing.

Hoover didn't bail out the banks and look what happened.

[RUMMYisFROSTED]

7. I understand it's use as a palliative.

I'm talking about the base assumption.

[jefferson_dem]

15. What a load of crock indeed.

Fact is, the public has zero stomach for any more massive "stimulus" packages. It will not fly, politically, even if it is the right thing to do (which it isn't).

[Capn Sunshine]

10. just so you are aware

sometimes, on occasion, writers who get published in the Nation are WRONG. PATENTLY WRONG. FULL OF SHIT, ABSURDLY WRONG.

If this was the 1930's we'd be cured by now. But it's not, and driving the bus by watching only the rearview mirror will result in that crash all of you are always "predicting".

[Better Believe It]

11. But not William Greider. He's right on target with his article.

[jefferson_dem]

16. "They are only wrong when they are defending the President."

Signed,
The OP

[PolNewf]

13. When you post anti-Obama posts profusely and exclusively

your agenda is clear.

[Garam_Masala]

14. Borrowing to spend on consumption has never caused prosperity

in nations, local governments, or individuals. The only time
borrowing money works when it is invested in wealth producing ventures
such as manufacturing, mining, agriculture, power generation or
infra structure. Also the amount borrowed must be limited by GDP.
Otherwise bankruptcy will result.