Obama, Spending Won't Create Jobs

It just might be that in our effort to prevent a double-dip recession we are fighting the last war. President Barack Obama, economist-adviser Larry Summers and the rest of the White House economics team think a second stimulus package is needed if the recovery is to be put on a sustainable basis and job creation is to perk up. They point out that debt-ridden consumers, aware that their various benefits, especially state pensions, might be reduced or even disappear, are saving more — something they are in any event prone to do given the uncertainty of their jobs and the decline in the value of their homes.

So, damn the deficit, full speed ahead, a position supported by the left wing of the president’s congressional party, undaunted by the fact that, despite the $862 billion first stimulus, unemployment hovers around double digits, more “discouraged workers” have given up the job hunt, and increasing numbers are out of work for longer than was typical of past recessions.

More conservative economists are calling for deficit reduction to shore up the confidence of businessmen who are sitting on something like $2 trillion in cash, their animal spirits dampened by this anti-business president. Obama’s political advisers, White House chief of staff Rahm Emanuel and senior adviser David Axelrod, are siding with the deficit hawks — though not because they worry very much about the attitudes of businessmen. They see that voters are more than a little upset about the mounting deficit and are prepared to oust Democrats in marginal constituencies if they support more deficit spending. . . .

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