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Saturday, January 19 , 2019, 9:45 am | Fair 54º


The Daily Capitalist: Is This the Change He Promised?

Obama may be president, but a pork-fed Congress appears to be calling his shots

I have the feeling that President Obama was surprised when the massive spending bill carried by House Democrats was unanimously opposed by House Republicans. He has stated several times that he thought he had significant “political capital.” As he famously said in a debate over the stimulus bill with Republican leaders, Republicans have to go along with his plan because, “I won.”

I don’t think he really anticipated the unanimous Republican backlash against the bill. As I pointed out in my column SmartGovernment™, Obama thinks the argument on big vs. small government is over and “we’re all Keynesians now.”

It struck me that this was naive of him. For all his supposed political savvy, and the behind the veil political smarts of his tough White House chief of staff, Rahm Emmanuel, this was a misstep.

What does this mean?

First I think it shows that House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, not Obama, are in charge of the Democratic agenda. Maybe this isn’t fair to Obama since he just got into office. But I didn’t hear him say a word against the huge amount of pork the Democrats have loaded into the stimulus bill (well, it’s really all pork when you think about it). His only call was against earmarks — which has been gleefully ignored by the Democrats. He did complain about several of the more porkish spending programs, but only after they were publicized.

Second, where is the change that he promised? He can’t seriously believe that this is the government that “works,” as he promised in his bipartisan call at his inauguration. As reported in a CNN story:

“Much of the $550 billion in spending (as opposed to the tax-cut provisions) is divided among these areas: $142 billion for education, $111 billion for health care, $90 billion for infrastructure, $72 billion for aid and benefits, $54 billion for energy, $16 billion for science and technology, and $13 billion for housing.

It included things like $335 million in funding for education on sexually transmitted diseases and $650 million for digital TV coupons. This is supposed to get the economy going again? If government spending is so good at helping the economy, then why didn’t President George W. Bush’s expected $1.2 deficit create prosperity? It can’t and it won’t.

This isn’t government that works; it’s a liberal version of Willy Wonka & the Chocolate Factory.

This has got to be a bitter pill for all those middle-of-the-roaders who voted for Obama. I think they really thought he would bring real change.

Lastly, it shows his lack of understanding of economics. I will assume his unconcern about his porkish Democratic legislators is due to his belief that all the government has to do is spend, spend, spend and we’ll lift ourselves out of the recession. He must believe it really doesn’t matter what it’s spent on, as long as the government spends and injects money into the economy. This is rather classic Keynesian theory: pay someone to dig a hole and then pay someone to fill it.

In one Keynesian anecdote, John Maynard Keynes was in a washroom with another economist drying his hands, and to show his distaste of his friend’s fastidious folding of a towel, he reached over and messed up the entire neat pile of towels and said he had just done more to create jobs than anyone else. Of course, Keynes didn’t understand Bastiat’s simple lesson of broken window.

I had very much hoped that President Obama would live up to the change promised by Candidate Obama. So far he has not shown leadership, only rhetoric.

— Jeff Harding is a principal of Montecito Realty Investors LLC. A student of economics, he has a strong affinity for free-market economics. This commentary originally appeared on his blog, The Daily Capitalist, formerly the Subprime Crisis Forum.

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