Nancy Pelosi recently said “It is almost a false argument to say that we have a spending problem.” She went on to say that what we have is a deficit problem. Conservatives have given Ms. Pelosi a lot of flack over her statement and maybe we have been too hard on the less than brilliant Congressman from San Francisco. After all she did use a qualifier; “almost”, which can mean “not quite”. And, she was spot on when she said the US has a deficit problem. Who could argue with that? By saying that we have a deficit problem instead of saying we have a spending problem, the loyal Democratic trooper was setting the stage for President Obama’s State of the Union address tonight. What she was saying is that if the problem is deficits, there are two ways (balanced approached) to reduce deficits: reduce
spending investments and increase taxes revenue. Of course that is what you are going to hear from the president tonight, if you bother to listen to him. That plus he will blame the Republicans for his own “sequester” idea. The president has evolved once more and now he believes the cuts in the “sequester” would hurt national defense and could also hurt the great stagnation recovery we are all experiencing. He will tell his listeners that about his “balanced approach”, which is much better because it increases taxes on the evil rich.
So, Nancy Pelosi, with her double-digit IQ, did what little she could for the President. On Sunday, Lawrence Summers wrote an article in the Washington Post giving the President some advice on that “almost fake spending” problem. Mr. Summers was a past president of Harvard, he was Secretary of Treasury under Bill Clinton (bye-bye Glass- Steagall, hello bailouts for the Too Big To Fail banks), and he was an economic advisor to President Obama in 2009 and 2010. It is probably safe to say that larry Summers has a higher IQ than nancy Pelosi. So, let’s see how he would fix our economic woes.
Summers starts out sounding almost reasonable:
There should be little disagreement across the political spectrum that growth and job creation remain America’s most serious national problem. Ahead of President Obama’s first State of the Union address of his second term, and further fiscal negotiations in Washington, America needs to rethink its priorities for economic policy.
The U.S. economy grew at a rate of 1.5 percent in 2012. Last week, the independent Congressional Budget Office projected that growth will be only 1.4 percent during 2013 — and that unemployment will rise. While the CBO says that growth will accelerate in 2014 and beyond, it nonetheless predicts that unemployment will remain above 7 percent until 2016.
Later, he goes on to say:
A broader growth-centered agenda is needed to propel the economy to its “escape velocity.”
Wow! That sounds encouraging. Our Democratic pundit has four recommendations for the President.
First, as the president has recognized, the budget cuts implicit in the sequester scheduled to begin in March should not be reduced but spread over time.
As Ronald Reagan would have said; “There you go again”. Kick those spending cuts down the road. Let the next generation take care of the problem. Of course, cutting government spending will hurt the economy. Government spending is now 25% of GDP. What is it buying us? Nada!
Second, the president and Congress should fix a firm year-end deadline to address the international aspects of corporate tax reform.
It’s true that American companies have about $2 trillion in foreign earned profits that they won’t repatriate because those profits would be hit with a 35% US tax. So, Summers’ plan is to wait a year to talk about reducing those taxes? Why wait, Larry?
Third, no American, regardless of his or her ideology, should be satisfied with the way the nation’s housing finance system is working.
Sure! Let’s see if we can create another housing bubble. Here is an idea for you, Larry. GET THE GOVERNMENT OUT OF THE HOME MORTGAGE BUSINESS!
Fourth, the transformation of the North American energy sector needs to be accelerated. This will have economic and environmental benefits. This will have economic and environmental benefits….approve the Keystone XL pipeline…Natural gas exploitation, too, could bring huge environmental benefits.
Bingo! One good idea out of four is pretty good for a Democrat. Way to go, Larry Summers.
The “State of the Union” sucks and I fully expect the Obama’s State of the Union speech will suck, as well. The Republicans could better spend their time at home with their families tonight. It’s going to be more of the same-O, same-O: more
taxes revenue enhancements and more spending investments in the future.
Well, now you know what I’m thinking. What are your thoughts?