Couldn’t agree more, but for different reasons.
(feel free to repost)
By Jeff Cox
July 8 (CNBC) — The dismal state of employment offers more proof that President Obama’s economic plan isn’t working, Republican presidential candidate Michele Bachmann told CNBC.
Speaking just after the government said unemployment rose to 9.2 percent last month, the firebrand Minnesota congresswoman and Tea Party leader delivered a blistering critique of the White House’s handling of the jobs picture, focusing specifically on the $800 billion stimulus that has failed to drive down the unemployment rate.
“The president’s own policies have clearly failed the American people,” Bachmann said. “The answer is not to double-down and continue to do more of the same. The answer is to work on what went wrong, to reverse course and have a pro-growth job agenda.”
The $800 billion did what it did- it added $800 billion in income and nominal savings to the economy- to the penny. It’s an accounting identity. If it didn’t add exactly $800 billion the accountants at the CBO would have to stay late and find their arithmetic mistake.
In fact, all entire deficit spending adds that much nominal savings to the economy. That’s where all the increased savings has come from. You could change the label of those deficit clocks to ‘world dollar savings’ and leave the numbers alone.
And note that treasury securities are functionally nothing more than savings accounts at the Fed.
Defying consensus estimates that the economy had merely hit a soft patch and was on its road to recovery, the latest jobs news instead shows just 18,000 jobs created in June and the unemployment rate when taking into consideration those not looking for work at 16.2 percent.
Right, the problem is the deficit is too small. I’ve proposed a full FICA suspension, federal revenue distributions to the state govts of $500 per capita, and an $8/hr federally funded transition job to anyone willing and able to work to facilitate the transition from unemployment to private sector employment.
Bachmann’s campaign has caught fire as polls show her in a virtual dead heat in Iowa with presumptive front-runner Mitt Romney.
In her live interview, Bachmann focused on the voices she has heard while campaigning and the angst among business owners about how Washington policies have hindered business growth.
“I have talked to business owners all across the nation,” she said. “They’re really paralyzed with fear right now. This won’t help hearing (the unemployment news) because it shows that Washington doesn’t have the solution.”
She spoke as Congress and the White House are locked in debate over whether to raise the $14.3 trillion debt ceiling. Bachmann dodged a question over whether the failure to increase the borrowing limit while drastically cutting spending would raise unemployment, but she said more taxes certainly aren’t the answer, either.
“We need to fundamentally restructure how government does spending,” she said. “We’re still operating under the principles of FDR and LBJ. We need to move into the 21st century so we embrace pro-growth policies. Unfortunately they’re tone deaf here in Washington, D.C. They think government is the answer, and the American people know it’s not true.”
I watched her explain how if they just do spending cuts to balance the budget that will create jobs in the long term. What she fails to understand is that with all of our ‘demand leakages’ and tighter lending standards, spending cuts have to be at least matched by tax cuts to not add to unemployment, and tax cuts have to be substantially larger than spending cuts to add to demand and reduce unemployment.
It’s a shame, because with the tea party standing for ‘taxed enough already’ the tea party candidates continue to propose balanced budgets that continue to grossly over tax us.
It’s also a shame that no one in the media has the knowledge of actual monetary operations to expose the gaping flaws in her logic. In fact, the have the same fundamental misunderstanding and tend to agree with her, including the entirely inapplicable analogy that we are in danger of becoming the next Greece.
So current odds have to favor her for the presidential nomination.
And only MMT stands between her and the presidency.