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It’s still the economy, stupid. The Washington Post’s Robert Samuelson spells out why the QE3 stimulus has done everything but stimulate. Mitt Romney’s campaign folks have said that he’s now going to start providing a lot more detail in his messaging; certainly the messaging showing why he’s a good choice, and hopefully the messaging showing why Obama’s a bad choice. It would go something like this:
One: History – stimulus simply has never worked, and the most recent stimuli – the Obama stimuli – the ones on everyone’s mind these days – have failed. The low interest rates created by the stimuli caused lower income for savers, who in turn have less to spend – some stimulus that is! Also, if tight credit stops potential homebuyers in their tracks or stifles a small business loan, those low interest rates don’t help in the least.
Two: Spending & Tax Cuts – the first stimulus cost $1.5T (considering tax cuts, spending increases, and so-called “automatic stabilizers"). The 200K to 1.2M jobs created in 2012 were hardly worth the huge expenditure.
Three: Uncertainty – Americans have never felt so uncertain about the future of the economy, which causes them to hoard cash and stay on the sidelines. And as Samuelson says, the most perverse possibility of all is that every new stimulus telegraphs to Americans that the economy’s still in bad shape, so they continue to retrench and sit on their cash – net effect: no stimulus at all.
Bottom line: Keynesian stimulus simply doesn’t work, and the most recent deployments of stimulus may have done as much or more damage as good. Mitt Romney will articulate this message, directly or through surrogates, over the next seven weeks, and a sufficient number of voters will hear and respond to this messaging. This puts the president into a position so weak that he could be beaten by a Ham Sandwich.
Mitt's Makin' The Case . . .