This op-ed in the Washington Times by Richard Rahn deserves to be read in its entirety for the way it destroys the current Keyenisan fad. More importantly, it shows that the Obama administration is in total denial that its economic policies have utterly failed.
As almost everyone now knows, there are two competing theories about how to revive the American economy. One theory is to promote the supply-side of the economy by cutting tax rates or at least to maintain the Bush-era tax rates and reduce spending and government regulation; the other theory is to follow the Keynesians' advice by allowing some or all of the Bush-era tax rates to increase while also increasing government spending and government regulations (which proponents call "more stimulus"). The new data, as captured in the accompanying chart, provides even more evidence as to which of these competing theories is correct.
Given the above facts - which have the benefit of being true (unlike many "facts" delivered by our elected officials) - would you follow the Reagan/Clinton II economic policies or the Obama ones? Where is the evidence - empirical evidence, as contrasted with theoretical models - that Obamanomics will work, particularly, since it is not now working as advertised? Will the Misery Index be cut by more than half during the Obama administration, as it was during Reagan's terms, or will it rise? Obama economic advisers Paul Volcker, Larry Summers and Christina Romer have, at times, all advocated polices totally contrary to the ones that Mr. Obama is now practicing. Are they, like many of those in the Democratic Party, all suffering from cognitive dissonance by continuing to push a failed model?
Is stubbornness or stupidity the reason President Obama continues down this ruinous path? The latter reason rings truer given our president's towering ignorance about economic matters. As long as he has people like Paul Krugman advising him from the sidelines, while ignoring what his own advisors are telling him, it is likely that only massive rejection of Democrats at the polls has a chance of changing his mind.
Even then, he may very well fail to draw the proper lessons from defeat. But at least the opposition will be able to block most of his most ruinous policies from being enacted.