Fiscally responsible

I thought I was in the Twilight Zone. How could the Obama’s administration promise huge expansions of the welfare state, tax cuts and still claim to be fiscally responsible?

No sci-fi answer there. They simply cheat. They manipulate the budget numbers to artificially change the budget line and claim savings or deficits where there are none. So long for the most transparent administration.

I am not asking why aren’t the media pointing out this lie. The media are Obama’s decentralized Propaganda office. Question is: what are the useless Republicans and the useless conservative economists/intellectuals doing about it? Nothing, they are useless.

One thing we know is that we can discard any news regarding the deficit coming from the White House.

Surreal

Let me get this straight.

The President of the United States gave a speech in front of Congress and the argument was fiscal responsibility. This same President just borrowed $1.3 trillion, has $420 billion new bill in Congress this week (with 9000 earmarks that will cover the march-september 2009 period); he announced, in said speech, increases in government expenditure regarding education and health care (and probably he intends to do something expensive regarding energy policy too). He has a mortgage plan and a TARP II coming.
Apparently he will cover these new expenses with the repeal of the Bush tax cuts (something that will not even start to cover these monster expenses and will have a negative effect on economic growth in a period of recession) and with the end of the Iraq War (that is, he will cover a permanent increase in government expenditure by cutting another outlay that was temporary in nature).

To put things in perspective, in one month he demanded resources far superior to those that Americans spent on the Iraq War, the Afghanistan War and the Katrina recovery effort in seven years. The Bush tax cuts, that sparked not only economic growth but also outrage among economists who worried about the deficit, were about $300 billion. Were are those economists now? Were are the media that during the previous administration worried about the impending collapse of American economy during to excessive borrowing?

Is this some sort of episode of the Twilight Zone?

Seven Follies

Yet another economist against the stimulus (please visit Greg Mankiw’s blog if you wanna have a more complete list of economists pro and against the stimulus package).

I wonder except De Long and Krugman how many economists are still supporting this opprobrium called stimulus?

California like France

Says the WSJ. The important difference is in the huge share of illegal/poor immigrants in California that are (probably) driving the public expenditure and (probably) not contributing to the revenue side of the equation.

Size and scope

I think it was Mises who first described the loop involving public failures and government increase in size and scope. In order to fix the problems created by government intervention, politicians usually demand more powers from the people. Recent events confirm it.

Since the government, both as political administration and Federal Reserve, caused the economic and financial mess we are in, the government has to expand with more than a trillion more in debt.

Lowering expectations

Lowering expectations serves two purposes: if the economy recovers soon Pres. Obama will claim he just saved us from catastrophe. If the economy collapses he will have painted himself as the responsible politician who says the truth even when it is not pleasant.
Things don’t have to work out this way necessarily but it is a first step.