Smart People, Dumb Plan

If Obama has such highly regarded financial advisers, why is his proposal for economic salvation so full of ideas that are misguided at best?  Geitner and Summers are reputed to be among the best financial minds out there, and are generally described as centrist in their economic philosophies.  Paul Volker and Warren Buffet are also said to be guiding the Obama economic camp, and Martin Feldstein and Robert Reich lobbied congressional members for the plan on Thursday.  So why are we getting an economic plan that consists of nothing more than contorted tax proposals and unprecedented pork barrel spending?

Let us forget for the moment that the recession if defined in the usual way, as two consecutive quarters of decline in GDP, did not begin until the third quarter of 2008.  Defining the recession as beginning in December 2007, and thus making it now the longest recession since 1981 and counting, was evidently read from the tea leaves at the National Bureau of Economic Research, which determines such things.  No concrete explanation was given for this departure, but it certainly is convenient to go back to December 2007, in order to a) blame Bush and b) stoke fear and panic.

Let us also forget for the moment that according to the New York Times:

The number of people continuing to claim jobless benefits ...was the highest level since November 1982, when the nation was emerging from a steep recession, though the labor force has grown by about half since then.  (Italics Mine)

Let us forget this comparison as well, from the same story:

Unemployment figures scheduled to be released Friday are expected to show...the first annual job loss since 2001 and the highest since 1945, though the number of jobs has more than tripled since then.  (Italics Mine)

The recession by the normal definition is not even six months old, and the latest unemployment numbers are being compared with previous recessions when the work force was far smaller than it is now.  While there is no doubt anywhere that this is a very severe recession, let us forget for a moment how much hyperbole is being put forward in the interest of impressing on the public what a disaster the president-elect has inherited.  Let us forget that the last extremely urgent plan was the original TARP plan, which was not even implemented as originally promoted.  Finally, let us forget that we, a nation of center right Americans, are being prepped to take a giant step to the left and swallow this massive dose of 1930's style failed policy.

It still begs the question how did such smart people come up with such a dumb plan?   Why all the convoluted and deceptive logic on taxes instead of straightforward tax cuts that would promote growth and restore confidence in the future.  Why all the pork barrel spending and the hair-splitting over earmarks vs. pork vs. urgent spending needs?   Why not drop the ideological blinders for a while and propose a real tax cut program that would give business and individuals incentives and confidence to restore our economy.  Why after all these months and all these new-found experts is this the best they can come up with?

See also: NBER's Anomalous Recession Calls