I heard many hopeful signals from Obama during the last two months, including the selection of his cabinet, the management of the transition, but especially the following snippet from last week on the so-called Stimulus: Policy will not be guided by ideology... there will be no left wing ideas or right wing ideas, only ideas that get results. Wonderful!
While he was saying this, however, one of his many economic advisers, and former Clinton acolyte Robert Reich was testifying to Charlie Rangel's Ways & Means Committee:
"I am concerned, as I’m sure many of you are, that these jobs not simply go to high-skilled people who are already professionals or to white male construction workers…I have nothing against white male construction workers, I’m just saying there are other people who have needs as well."Well, I'm sure we don't want highly skilled people building bridges, let alone the dreaded white male. But the last time I looked, we were talking about a spending bill to stimulate the general economy. That's why it's called the Stimulus package, as opposed to the Welfare package, or the Homeless Relief package, or the Affirmative Action package.
Reich couldn't have said anything more directly opposed to Obama's results-rather-than-ideology statement.
Rather than debate how to maximize the general economic impact of the spending in terms of metrics (growth of GDP, jobs, fewer unemployment applications, etc.), some in the new regime are more concerned with the social impact of the spending.
Nor have they considered the inflation that will likely accompany new economic activity. Who benefits -- besides state and federal government tax receipts -- when inflation soars into double digits, as it did in the 1970s? We all know how slow state and federal governments are to index tax rates when inflation rises. And they are slow for a reason: By increasing government revenue without legislative action, inflation is a tax that doesn't risk anyone's re-election!
And it takes hold more quickly, before people feel its pinch.
If you think I'm being too conspiratorial here, tell me why, with the Treasury increasing the money supply since October, there is no discussion of how to mitigate inflationary risk in the implementation of these spending programs?
We all know, from reading Reich's memoir Locked in the Cabinet, that President Clinton made a clear choice to grow the nation's economic output and reduce federal debt as a means to general prosperity rather than pursue Reich's Marxist agenda of central economic planning, limiting the nation's economic output through government policy, then rationing pieces of it to politically correct constituencies.
Similarly, Obama will have to control the left wing of his party and Congressional patronage hacks if he intends to get broad-based growth as a result of his Stimulus package, rather than ideological triumphs. Let's see how he does. If he can't, Joe the Plumber was right.
