Monday, November 10, 2008

And so it continues

According to the FT, Obama is planning to go big:

"US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday."

"Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years."

"Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. “These are crises you can no longer afford to postpone [addressing].”

"Mr Emanuel, Mr Obama’s first appointment after his emphatic victory over John McCain last week, added that Mr Obama would push hard during the 11-week transition before he is inaugurated for early assistance to the collapsing US car industry, which he described as “an essential part of our economy”."

"Sunday’s comments also reinforce the impression that Mr Obama’s transition economic advisory board – which includes leading lights of the Clinton era, such as Lawrence Summers and Robert Rubin – is tilting heavily towards a “big bang” approach that would combine a short-term stimulus with large public investments to raise the longer-term US growth rate."

"In a radio address to the nation on Saturday, Mr Obama emphasised the urgency both of passing a fiscal stimulus package, which could include a middle-class tax cut, and of moving swiftly ahead on long-term public investments."

“We can’t afford to wait on moving forward on the key priorities that I identified during the campaign, including clean energy, healthcare, education and tax relief for middle-class families,” said Mr Obama. “We also need a rescue plan for the middle class that invests in immediate efforts to create jobs and provides relief to families watching their paychecks shrink and their life savings disappear.”"

Man oh man oh man oh man. Again with the canard that the big 3 automakers are "an essential part of our economy" along with the view that they will somehow disappear forever absent a few billion from the goodie bag.

And we are also treated to "large public investments to raise the the longer term US growth rates". People, one thing that Robert Solow got right is that investment is NOT the key to long term growth. The key to long term growth is technological progress. Somehow I do not think these public investments will be in the form of R&D grants, or massive increased funding for basic research, or even prizes for specific discoveries or innovations. Absent that, they are not going to raise the nation's long term growth rate.

We are in for an interesting two years at least.


Norman said...

Perhaps the senator thinks there is a type of AK model at work in the US economy. I can see how that conversation went after his economic advisers mentioned the idea.

Advisers: In AK models of growth, investment has permanent growth effects.
Obama: Cool! The government should be doing tons of investing!
Advisers: Now, senator, most of the profession has discounted these models...
Obama: Government spending, here we come!
Advisers: Charles Jones...
Obama: Doesn't matter who.
Advisers: Why are we here, again?

bd said...

Don't worry. Christopher Buckley has offered to pick up the tab for all this.

Anonymous said...

comment one:

I thought Naomi Kline thought that crisis would bring libertarian free markets down on us.

comment two:

Was that a statement suppose to be that the big auto companies are an essential part of our economy, or an existential part?

Two years indeed.

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