GOP Finally Discovers Obama's Achilles Heel: Just Let Him Do What He Does... And Encourage It!

Zero Hedge ^ | 2-13-12 | Tyler Durden

[radioone]

Two weeks ago when discussing the latest lunacy surrounding America's exponential curve #1 also known as its debt balance, we suggested what the GOP election strategy should be: "[if] the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants? Because if Congress approves another $200, 300 or even $400 billion in stimulus pork (the only thing better than one Solyndra? One thousand Solyndras!) the Treasury will drown in the need to raise hundreds of billions more, and will in fact hit the ceiling well in advance of the elections.

[radioone]

This is an interesting theory, but I Hate the Debt!!!

[brownsfan]

More business as usual. The only way to defeat the opponent is screw the country. But then, who cares? Those GOP politicians will make millions!

[Boogieman]

Wow, this guy really is not seeing the forest for the trees. Say the Republican Congress approved this type of spending. Even if it did damage Obama’s re-election chances, it would also infuriate the base of the party. That would probably drive down Republican turnout and hurt every one of our candidates down the line. We could then end up with Obama still getting re-electing, and a turnover in Congress back to the Democrats.

[Liz]

The Stimulus Bombshell
MyGovCost.org ^ | 1/24/12 | Craig Eyermann
FR Posted January 31, 2012 by GSWarrior

Stunning.

That’s really the only word we can use to describe the release of a “sensitive and confidential” 57 page memo, written by then soon-to-be U.S. Treasury Secretary Larry Summers in December 2008, about what became President Obama’s signature economic program in the first year of his presidency: the “stimulus package”.

James Pethokoukis has summarized some of the most significant aspects of the memo, which we’ve excerpted below, and which reveals the Obama administration’s thinking behind what became an over 821 billion dollar boondoggle. The bold text represents Pethokoukis’ summary of that thinking, which is directly followed by a supporting quotation from Larry Summers’ memo:

1. The stimulus was about implementing the Obama agenda. The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary.... The stimulus package is a key tool for advancing clean energy goals and fulfilling a number of campaign commitments.

2. Team Obama knows these deficits are dangerous (although it has offered no long-term plan to deal with them). Closing the gap between what the campaign proposed and the estimates of the campaign offsets would require scaling back proposals by about $100 billion annually or adding new offsets totaling the same. Even this, however, would leave an average deficit over the next decade that would be worse than any post-World War II decade. This would be entirely unsustainable and could cause serious economic problems in the both the short run and the long run.

3. Obamanomics was pricier than advertised. Your campaign proposals add about $100 billion per year to the deficit largely because rescoring indicates that some of your revenue raisers do not raise as much as the campaign assumed and some of your proposals cost more than the campaign assumed.... Treasury estimates that repealing the tax cuts above $250,000 would raise about $40 billion less than the campaign assumed.... The health plan is about $10 billion more costly than the campaign estimated and the health savings are about $25 billion lower than the campaign estimated.

4. Even Washington can only spend so much money so fast. Constructing a package of this size, or even in the $500 billion range, is a major challenge. While the most effective stimulus is government investment, it is difficult to identify feasible spending projects on the scale that is needed to stabilize the macroeconomy. Moreover, there is a tension between the need to spend the money quickly and the desire to spend the money wisely. To get the package to the requisite size, and also to address other problems, we recommend combining it with substantial state fiscal relief and tax cuts for individuals and businesses.

5. Liberals can complain about the stimulus having too many tax cuts, but even Team Obama thought more spending was unrealistic.

As noted above, it is not possible to spend out much more than $225 billion in the next two years with high-priority investments and protections for the most vulnerable. This total, however, falls well short of what economists believe is needed for the economy, both in total and especially in 2009. As a result, to achieve our macroeconomic objectives—minimally the 2.5 million job goal—will require other sources of stimulus including state fiscal relief, tax cuts for individuals, or tax cuts for businesses.

6. Team Obama thought a stimulus plan of more than $1 trillion would spook financial markets and send interest rates climbing. To accomplish a more significant reduction in the output gap would require stimulus of well over $1 trillion based on purely mechanical assumptions—which would likely not accomplish the goal because of the impact it would have on markets.

[capydick]

Interesting theory yes, but, in reality, not a smart one. The country still get’s screwed in the long run - we need to hold our debt at where it is now and cut from here - not from a higher number.

[Liz]

In a fair accounting, President Obama is responsible (along with the then-Democratic Congress) for the $1.3 trillion in deficit spending in 2010 and the estimated $1.6 trillion in deficit spending in 2011. He [Obama] should not get credit, moreover, for the $149 billion in TARP (Troubled Asset Relief Program) repayments made in 2010 and 2011 to cover most of the $154 billion in bank loans that remained unpaid at the end of the 2009 fiscal year—loans that count against President Bush’s 2009 deficit tally.

The Treasury Department says that all but $5 billion of the TARP bank loans has now been repaid. The portion of repayments that was for loans issued in 2009 should be deducted from Bush’s deficit tally, not credited to Obama as deficit savings. There is some astounding number crunching in this article, and a chart of modern day president’s “average annual deficit spending” ........a frightening conclusion of what happens if Obama has an 8 year term.

[FrankR]

[KarlInOhio]

And what will the GOP response be to extending the debt ceiling when we hit it before the election?

Mammoth Cave!

[ngat]

“...it would also infuriate the base of the party...”

Not to mention, they would have to share the blame. No, Congress must resist this spending.

[Georgia Girl 2]

“No, Congress must resist this spending.”

They should but they won’t.

[ngat]

Well, I clicked and read Tyler Durden’s article and the statement by the House leadership (Boehner, Cantor, McCarthy) seems to say they signed on to the bill with unemployment extension and 2% payroll tax holiday, and no cuts in spending to offset it, because they were forced into it, sorta, and they didn’t want to harm the little guy.

So, maybe they resisted the spending a little bit, but not as much as they should have?

[tndarlin]

Question: If this payroll tax cut is saving me $40 a month, does it cost me in SS retirement funds in the future? If it does cost me, to what extent?

[skinkinthegrass]

thanks, Liz. :-)

[ngat]

Well, I remember asking that same question back in December 2011 when that issue was being ignored during the Christmas Holidays and the pre-Iowa caucus debates.

All I know is the numbers on your Form SSA-7005 Personal Earnings and Benefit Statement will not read the same as if you were contributing in full (2% more).

[nascarnation]

If you believe that Social Security will continue to operate in the future “as promised under current laws” the answer is no, the payroll tax cut does NOT impact your future benefits:

http://www.redstate.com/dhancock/2011/12/23/understanding-the-payroll-tax-cut/

Now the REALITY is that as the system implodes in the future due to lack of funding, EVERYBODY will see reduced benefits, and the tax cut probably makes that day closer.

[nascarnation]

Ping to #15

[tndarlin]

It was kind of a rhetorical question, but why is this not being screamed from the rooftops by the GOP??

[nascarnation]

It’s a decades old story.

Old people (I’ve become one since the story began, LOL) vote in high percentages compared to other age groups.

A lot old people actually believe the Social Security fable because it has been implanted deeply in their brains by an activist arm of the Democrat Party known as AARP.

Most politicians of the D or R brand are terrified to tell the truth about this scam.

[ngat]

“It was kind of a rhetorical question, but why is this not being screamed from the rooftops by the GOP??”

Best I can figure, GOP is trying to not get drawn into arguing about entitlements on the Democrats terms. If GOP starts defending keeping the SS funding level constant, they are also drawn into arguing for funding all SS and Medicare benefits to whatever level it take to fund the benefits for those programs - in essence into defending these actuarily unsustainable schemes in general.