Obama's Job Creation Versus McSame's Spending Freeze

The debate raging on how to fix the economy is the government's role in all of this, whether or not we should increase spending right now, or sharply curtail it and cut taxes instead. Both plans will increase the deficit. That's the important thing to remember. McSame wants to cut the tax rate on corporations and businesses and deregulate health care coverage, but cut spending across the board. Obama wants to increase spending on health care and education, and cut taxes on the middle class, but raise taxes on the wealthy.

The first approach, McSame's, is best described by Digby: Neo-Hooverism.

I see that Donna Brazile signed up for neo-Hooverism on the Sunday chat shows this morning, seeking to constrain a potential Democratic Administration by suggesting we have to tighten our belts in the middle of a recession, which is nothing short of economic suicide. I can tell you that this is not a unanimous view inside the Democratic inner circle, based on what I experienced yesterday.

I was fortunate enough to see Bill Clinton at a small-group discussion in Century City for a group of entertainment industry professionals. This was not a campaign event, and indeed the President was somewhat constrained by campaign finance laws to really advocate for any candidate. But aside from Clinton announcing his preference for Gray's Anatomy and Boston Legal, what was most notable was his discussion of the hypothetical "first 100 days" for a new President. This is from my notes:

The next President is going to face much different challenges than what I faced in 1993, and he can't do the same things... he shouldn't try to fix the deficit right away, but he's going to have to stimulate the economy by paying for things that are useful... we have had too much risk and not enough legislation... we need a government strong enough to prevent the market from devouring itself... I was happy to see Senator Obama call for a moratorium on foreclosures, and we also need to do what we did in the 1930s by buying up these mortgages and giving homeowners the ability to stay in their homes, to minimize disruption and maximize confidence... so let's stimulate the economy, and give birth to a new economy based on old-fashioned financing and modern products. It cannot be based on finance.

Obviously Clinton is part of a different side of the Democratic Party than Senator Obama. But there's a significant amount of overlap, and to hear the President who ushered in deficit reduction and fiscal responsibility in the 1990s recognize very clearly the need for stimulus, in the areas of infrastructure, job creation and the new energy economy, makes me very much reassured and hopeful. And indeed, in the last debate Obama pushed back on the idea of reinstituting PAYGO during a time of recession. This idea of helping state and local governments, putting money into infrastructure and green energy and jobs is very much a part of Obama's stimulus policies. They need to be bigger, but there's no trace of neo-Hooverism there.

If McSame's approach is Neo-Hooverism, then the opposite is what we need. If both the Clinton and Obama wings of the Dems agree that stimulus spending and job creation, a sort of Neo-New Dealism, is the way to go, like Digby I've got hope.

But the GOP will do everything they can to stop it, as will the Village. Neither one of them is interested in seeing Government help people. They yell "Socialism!" even as the financial system gets trillions in taxpayer money redistributed to it, with the full intention of saying "OK, we got ours, we simply can't afford to help YOU poor schmucks now. You're on your own. You get to use the free market, and since you can't compete with us...you lose. Have a nice day."

On the other hand, we will have to eventually massivley restrain spending or massively raise taxes. Bush doubled our national debt in 8 years. We have no choice, America is still in hock to China and Saudi Arabia, not to mention held hostage by entitlement programs. Obama has decided to go with raising taxes for a bit, while McSame wants to cut spending.

We've gone with 30 years or so of cutting taxes. Didn't work...and spending exploded anyway. It's time for a different approach.

That is if the economic system doesn't fall apart. There's no guarantee that we're out of the worst of the crisis yet...we've just punted into an undetermined point in the future.