Commentary Magazine


Contentions

Sticking with a Losing Economic Plan

Stephen Hayes reminds us that none other than Obama once warned us of the folly of raising taxes in a recession:

Barack Obama understands that it’s bad economics to raise taxes in a recession. It’s “the last thing you want to do,” he said almost exactly one year ago. … Obama was blunt: “Well — first of all, he’s right. Normally you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to [Elkhart, Indiana resident] Scott [Ferguson] is — his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”

But the Obama team insists, contrary to much available evidence, that we’re in the midst of a recovery — so we can tolerate the liberals’ mischief-making:

When he was asked specifically about raising taxes on top income earners, as is scheduled to happen on January 1, 2011, [Tim] Geithner said, “The country can withstand that. The economy can withstand that. I think it’s good policy.”

It was an interesting word choice: “withstand” a tax hike? So the U.S. economy is strong enough to endure the additional constraints the Obama administration wants to place on it in pursuit of its redistributionist goals? This is the triumph of ideology over economics.

Obama and his brain trust not only ignore their own country’s experience and struggling economy, but also turn a blind eye toward the counter-example in Germany, which resisted Obama’s exhortations to get the government to spend (actually, borrow in order to spend) its nation out of the recession. Germany’s economic recovery (on track for 9 percent annual growth) should serve as a lesson to those still enamored of Obamanomics:

Germany has sparred with its European partners over how to respond to the financial crisis, argued with the United States over the benefits of stimulus versus austerity, and defiantly pursued its own vision of how to keep its economy strong. … By paring unemployment benefits, easing rules for hiring and firing, and management and labor’s working together to keep a lid on wages, Germany ensured that it could again export its way to growth with competitive, nimble companies producing the cars and machine tools the world’s economies — emerging and developed alike — demanded.

When Paul Krugman comes out of hiding, I look forward to his explanation of this one.

Maybe some restraints on spending, some pro-growth and pro-job-creation policies, and a halt to tax increases might be in order. Nah, the Obami insist they have everything under control.