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Ian Welsh Headshot

Obama and The Economy: How It's Going to Play Out

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Time to cut the hope haze and cue a dose of reality:

1) The stimulus bill that will pass is going to be essentially the Gang of Four compromise. Obama's original plan was too small and badly created. The House bill, though a vast improvement was still not enough to do the job. The Senate "compromise" bill is even worse than Obama's original bill. It won't do the job. Period.

2) The next step after this is going to be Geithner's plan. While we don't know the details yet, I am willing to lay long odds that it is going to be a huge heaping bowl of suck whose main selling point will be transferring taxpayer money to banks. Probably not hundreds of billions. Probably a few trillion.

3) Then we're going to get entitlement "reform." Since Obama is promising this to Blue Dogs, this isn't going to be anything you're going to like.

At the end of all this, assuming it doesn't turn into an actual depression, we're going to have Japanification (a situation where you never get a good economy ever again) on steroids. Don't believe me, believe the president's own economists,whose report shows employment not fully recovering.

But the next recession or financial crisis or both will be even worse, because the US will have used up so much of its good credit not properly dealing with this one. And the next one after that even worse. All assuming that any of these doesn't turn into a Great Depression.

This is what is planned for you. This is what Change is going to be. Obama never even tried to pass a good stimulus bill -- his original had 40% tax cuts. The compromised bill has 42% tax cuts. No wonder he's praising the Senators, they got him the bill he wanted, more or less. The only people in this debacle who acted in the interests of ordinary Americans are House Democrats, but in the end they're going to be forced to choose between no bill and a fatally compromised bill.

Plus Ca Change, Plus C'est La Meme Chose

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