Sunday, August 23, 2009

The US lagging recovery

Mark Steyn:
Meanwhile, in Brazil, India, China, Japan and much of Continental Europe the recession has ended. In the second quarter this year, both the French and German economies grew by 0.3 percent, while the U.S. economy shrank by 1 percent. How can that be? Unlike America, France and Germany had no government stimulus worth speaking of, the Germans declining to go the Obama route on the quaint grounds that they couldn't afford it. They did not invest in the critical signage-in-front-of-holes-in-the-road sector. And yet their recession has gone away. Of the world's biggest economies, only the U.S., Britain and Italy are still contracting. All three are big stimulators, though Gordon Brown and Silvio Berlusconi can't compete with Obama's $800 billion porkapalooza. The president has borrowed more money to spend to less effect than anybody on the planet.
I don't know if the "stimulus" plan is responsible for extending the recession. Only a small portion of the money has actually been spent -- that is to say, it wasn't designed to stimulate to begin with. Still, a small portion of a huge amount is quite a lot of money. That's money that was taken out of the economy, and therefore wasn't allowed to contribute to a recovery.

But it's fair to point out that the housing bubble was a US phenomenon, so maybe that's why we're not snapping back as quickly as other countries. Regardless, it's hard to justify taking hundreds of billions of dollars out of the private sector (the part of the economy that actually creates wealth) at a time when we desperately need growth. Even if that money isn't taken directly, but is borrowed instead, it equates to less credit available to the private sector, and higher taxes down the road -- both of which retard growth and delay recovery.

As an aside, the article points to yet another example of Obama directly contradicting himself:

But the silver-tongued salesman sails on. Why be scared of a government health program? After all, says the president, "Medicare is a government program that works really well," and if "we're able to get something right like Medicare," we should have more "confidence" about being able to do it for everyone.

On the other hand, says the president, Medicare is "unsustainable" and "running out of money."

By the way, unlike your run-of-the-mill politician's contradictory statements, these weren't made a year or even a week apart, but during the same presidential speech in Portsmouth, N.H.

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