Months ago I observed:

… the basis for the spendstravaganza is the supposed need for government money to stimulate the economy. That is the core of Keynesian policymaking, that government money (either through taxation, debt, or artificial money creation) will stimulate spending, which will stimulate industry, put folks back to work, and force the economy into recovery. The opportunity costs of the government getting that money must be studiously ignored — they are defined away in theory, anyway; the Keynesian assumes government spending has a “multiplier effect” that is always greater than one. That is to say, government spending is assumed to create wealth. So the wealth-maximizing position calls for more government spending — more, more, a trillion times more!

Which works so long as the politicians keep up the charade. Obama, struggling in vain to square the enormity of spending under his brief watch with his stated preference for fiscal responsibility, just cannot. He inevitably makes Oz-behind-the-curtain blunders. …

We have seen what’s happened with those opportunity costs and the multiplier effect. The costs outweigh the benefits, the effect is a multiplier turns out to be less than zero again, and thus the economy that was supposed to peak at 8 percent unemployment with the stimulus rather than 9 percent unemployment without, is at 10.2 percent unemployment and climbing.

So there they go again:

After spending binge, White House says it will focus on deficits

President Barack Obama plans to announce in next year’s State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 ? and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning. …

?Democrats have to reassure voters we are not being reckless,? said a Democratic official involved in the planning.


“We just want to reassure the public we’re not being reckless.”