Obama’s fiscal stimulus no substitute for cheap oil
By Jeff Rubin, Globe & Mail, Sept 22, 2010
There is nothing intrinsically wrong with President Obama’s earmarking $50-billion (U.S.) for new transport infrastructure, or extending the Bush tax cuts to low- and middle-income American households—provided the country can afford them. But already burdened with a record budget deficit of over $1-trillion, most Americans probably think Washington’s already done far too much for the economy as it is.
After all, there seems precious little to show for all the fiscal stimulus. The U.S. jobless rate seems stuck at around 9.5 per cent, and the GDP remains miles below its pre-recession peak. And although the economy is indeed growing, its pace is a shadow of past recoveries, and a fraction of last cycle’s growth rates.
It’s those very economic failings that compel the White House to try to bring even further stimulus to bear on the U.S. economy. But implicit in this strategy is the belief that today’s economy can be force-fed more government spending and tax cuts to achieve yesterday’s rate of growth.