The $787B mistake:

…the 1930s Keynesian model that was used to sell the idea of fiscal stimulus to Americans was eliminated from economics decades ago.

And this abandonment of Keynesian multipliers does not reflect any ideological or partisan issues that divide conservatives and liberal economists. Rather, it is because the old Keynesian model does not come anywhere close to meeting today’s standards for economic analysis…

…modern economic analysis shows that the impact of government spending on the economy depends on what it is being spent on and how it ultimately is paid for.

The upshot of this new research is that multipliers are nowhere near the numbers that were cited in support of ARRA and, in fact, can be negative, depending on how the spending is ultimately financed. Robert Lucas, the 1995 Nobel laureate in economics who specializes in macroeconomics and government policy, recently remarked that the promise of large multipliers presented by private macroeconomic consulting firms in support of ARRA was “schlock economics.”

One of the infuriating things about the rush to passage of that disastrous legislation was the continual lies, from people like Ed Rendell, and Chuck Schumer and others, that most economists agreed that it was essential to recovery when, at best, there was merely a consensus that something should be done to soften the blow of the financial implosion, but not ARRA. And the media, of course, never called them on it. And of course, the president and others trotted out their usual straw men, and false choice, saying that anyone who didn’t want to implement that legislative atrocity wanted to do “nothing.”

Simply suspending the payroll tax for the rest of the year would have been a lot more effective, and cost a lot less, without creating this huge new tidal wave of debt in the out years.

[Lunchtime update]

Rasmussen: 45% say cancel the rest of the stimulus spending. Only 36% disagree. Expect that number to go higher. And that’s not “adults.” It’s likely voters. Democrats will ignore this at their peril next election season.

And note this:

A plurality of government employees believe speeding up the stimulus will be good for the economy. However, those who work in the private sector strongly disagree.

In other words, the people who understand how the economy works (because they’re the ones who make it work) are opposed to this, while the people who get their money from it are in favor. The goal of the Big Government party (on both sides of the aisle) is to increase the latter and decrease the former, not understanding that, eventually, this will cause the collapse of the nation.

[Another update a couple minutes later]

Here’s a nice visualization:

Will Wilkinson:

Some are grumbling about Deese’s lack of relevant experience. (He has driven a car and once slept in the parking lot of a GM plant!) But the real issue isn’t Deese’s resume. The real issue is why anyone should have the power to “rewrite the rules of American capitalism.” Unlike Deese, Treasury Secretaries Paulson and Geithner are men of experience. But what kind of experience could justify the immense, arbitrary power they’ve exercised in the wake of the financial meltdown? Experience centrally planning the global economy?

Deese’s embarrassing rawness is actually welcome, for it draws our attention to the invidious inequalities inherent in a government with unconstrained discretion. Deese isn’t going to pick the colors for the Chevy Malibu. But he could. And Obama can tell us that Congress won’t dictate which factories GM should close. But it will.

Liberals used to care about inequalities in power—and they were right to. Because equality of power ensures freedom. Being equal in our basic rights, no one has a natural right to rule over another. This kind of liberal egalitarianism is the root of the prohibition on titles of nobility found in the American Articles of Confederation. It is also the root of the very idea of limited government—the idea that a government’s power is legitimate only if it is carefully parceled out, well-checked, and limited in scope to tasks only a government can perform.

The answer is simple: they’re not liberals and haven’t been in a long time, if they ever were.

[Update a couple minutes later]

The prescience of Robert Heinlein — he saw the future of the US auto industry.

This looks like an incipient disaster.

Fictional job numbers from the administration? I’m shocked. Of course, if we had a press corps that was a watchdog, instead of a lapdog, they wouldn’t continue to get away with this sophistry.

[Update a few minutes later]

“Drop dead, American business:”

So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned? How could Obama possibly say, as he did last month, that he wants “to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens?” Further, how could Treasury Secretary Tim Geithner call a practice that top scholarship has shown increases wages and employment in the U.S. “indefensible?”

I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations.

As I said yesterday, it’s Munchausen By Proxy. By keeping the economy permanently sick, they hope to entrench their power, as FDR did.

[Update early afternoon]

Cue the laughter. It’s pretty sad when Chinese students are a lot more business savvy, and understand basic economics better than our own home-grown press. Or the US Secretary of the Treasury…

Like this:

…thanks to Barack Obama and democrats, the US Unemployment rate is worse today than if they never would have passed their stimulus package. The Obama Administration predicted the unemployment rate with and without President Obama’s stimulus package, the one that is supposed to “create or save” 3 million jobs.

Unfortunately, the red line shows the actual trend since the Stimulus was passed.

It wasn’t stimulus, it was scamulus. And it’s scandalous. Or it would be if we had a press that was a watchdog, rather than a lapdog, when Democrats are in power.

[Afternoon update]

Andy McCarthy noted Austan Goolsby’s dancing around this issue this morning, with two left feet:

I caught a panel on which Obama economic advisor Austin Goolsbee conceded that the administration had previously predicted unemployment would top out at around 8%, that it was now up to 9.4%, and that double-digit unemployment was a distinct possibility in the near future. Goolsbee didn’t resort to the administrations’s blather about “saving or creating jobs,” but he did repeat its fustian about how last month’s loss of 345,000 jobs (resulting in a half percentage point jump in the jobless rate) is somehow good news because it beat predictions (I don’t recall him saying whose) of even more dire loss numbers. It made me wonder why, if those predictions either existed or were serious, the Obama administration would have previously predicted that unemployment would top out at 8%?

Because they’re economically clueless, and willing to drive the economy deeply into a ditch if it will expand and entrench their political power?

[Monday morning update]

More thoughts from Stephen Green:

Let’s pretend for a moment that, god forbid, you break your arm. And somehow you end up with a team of doctors all trained at Obama University. As you lie there on the table in the ER, one doctor treats your arm by banging on the unbroken one with a ball-peen hammer. The second doctor takes the unusual course of setting your hair on fire. And the third one uses leaches.

Undeterred by your arm’s stubborn refusal to set, soon the doctors start blaming one another. And even though all of them are doing nothing but compounding your injury, none will take any blame. In fact, the louder you scream, the harder they go to work on you.

That, apparently, is what’s going on in the West Wing these days. Our economy is being managed by Dr. Howard, Dr. Fine, and Dr. Howard.

It’s Munchausen Syndrome by Proxy.

[Bumped]

…by stealth:

The editorial hints that these sorts of provisions have been inserted because the bill’s authors are counting on fellow members of Congress not to read what they’re voting on. They undoubtedly remember how easy it was to get Congress to ban incandescent light bulbs by sneaking a provision into the Bush-era energy bill.

Tar. Feathers.

A warning to modern “progressives” to be careful what they wish for:

I’m thinking of an American president who demonized ethnic groups as enemies of the state, censored the press, imprisoned dissidents, bullied political opponents, spewed propaganda, often expressed contempt for the Constitution, approved warrantless searches and eavesdropping, and pursued his policies with a blind, religious certainty.

Oh, and I’m not thinking of George W. Bush, but another “W” – actually “WW”: Woodrow Wilson, the Democrat who served from 1913 to 1921.

President Wilson is mostly remembered today as the first modern liberal president, the first (and only) POTUS with a PhD, and the only political scientist to occupy the Oval Office. He was the champion of “self determination” and the author of the idealistic but doomed “Fourteen Points” – his vision of peace for Europe and his hope for a League of Nations. But the nature of his presidency has largely been forgotten.

That’s a shame, because Wilson’s two terms in office provide the clearest historical window into the soul of progressivism. Wilson’s racism, his ideological rigidity, and his antipathy toward the Constitution were all products of the progressive worldview. And since “progressivism” is suddenly in vogue – today’s leading Democrats proudly wear the label – it’s worth actually reviewing what progressivism was and what actually happened under the last full-throated progressive president.

The record should give sober pause to anyone who’s mesmerized by the progressive promise.

But they don’t even understand their own intellectual history.