Commentary Magazine


Change We Can’t Begin To Afford

I share Larry Kudlow’s take on the President-elect’s economic team. The good news:

 In fact, there is no question that Obama’s economic team is right of center. All three are market-oriented. They’re also pro-free-trade. Hopefully Summers and Geithner maintain the Robert Rubin King Dollar policy of the Clinton years. And if Ms. Romer can stop tax hikes, that will help the greenback even more.

But there is a big problem. Their game plan–spend, spend, spend–is fundamentally flawed. Kudlow explains:

Now here’s the rub: all this talk about a $700 billion stimulus package. I hate to be the one to pull the plug, but government cannot spend our way into prosperity. The wish list of Democratic spending initiatives includes short-term tax rebates, massive new transportation bills, even more education money, exotic green-technology spending, a big-government embrace of health care, and heaps of cash for UAW-Detroit carmakers. None of that will stimulate economic growth.

Moreover, it is a colossal waste of money, considering his goal is only 2.5 million jobs, quite low by historical standards. Think of it this way:

Obama’s stimulus plan could eventually total $700 billion, the Washington Post reports. So, as former Council of Economic Advisers chief Gregory Mankiw notes, each job Obama “creates” will cost $280,000.

Shocking, really, the obvious inefficiency and misdirection entailed with such a massive government spend-a-thon.

So we are left with a mish-mash of free trade, no tax hikes, continued government regulation and intervention, plus massive deficit spending. In short, it’s the third Bush term–but worse. Will it work? I suppose there’s a first for everything. But don’t ask how we sustain a deficit of more than a trillion dollars. No one has a clue.