The Contradictory Switch From Budget Busting Tax Cuts to Spending Cuts to Save the Budget Still Boggles

Sometimes I think President Obama likes to have his cake and eat it too.

When President Obama used Republican support to extend the Bush tax cuts for another two years back in December, it made sense if you understand and accept the principles of Keynesian economics. The economy was already weak and raising taxes could have weakened demand. In the first two years, the Administration clearly understood the need for stimulus, quantitative easing, and keeping taxes low during a deflationary recession. The Affordable Care Act was a good policy in that it covered Americans and lowered the budget forecast. It was pretty Keynesian-neutral. However, when economic conditions get even worse, suddenly the Administration switches to prefer the opposite economic policy.

Now the Administration is playing along with Republicans, who want to cut trillions of dollars in spending, despite an even worse economic outlook than in December. How can the Administration act so definitely Keynesian and then expect budget cuts to generate positive economic outcomes?

You really can’t explain this by any economic or rational principle, except that the Administration believes if they don’t cut spending, voters will punish Obama for not doing that.

Presumably, the White House’s policies are to get Obama re-elected. If this is considered their best political move, they are wrong.

At best, it’s a dangerous political bet with Republicans to neutralize the issue where voters are presumed too stupid to know cutting spending will be bad and too unperceptive to see the damage the cuts will do. It also assumes people who approve of massive spending cuts will also approve of Obama for enacting them. Well, it’s possible it will turn more people off than switch allegiances.

In 2010, it looks like a sizable amount of first time 2008 Obama supporters sat out, probably for operating like a Republican. Cutting spending massively in bad economic times would be a very Republican thing to do, and could keep those 2010 wallflowers out in 2012. Best case scenario, the cuts hurt the economy a little or the negative effects are delayed and Obama weathers the storm. A worse scenario is Our Betters will cut trillions and voters will punish Obama and not the Republicans – which is the entire Republican strategy.

The scariest possibility is that the Administration can’t hold one policy for a year.

Obama’s already decided any jobs bill would be too weakened in committee to be effective. Well, the best alternative is to demand it stay strong and hammer it out in the Senate, calling out the “centrist” who don’t have political futures in 2012 anyway.

If Obama and Democrats want to get re-elected, propose a massive jobs bill, tell people this isn’t Greece and we’re going to get people jobs before we cut billions/trillions in welfare and government programs that help the middle class. Then, force Republicans to actually vote for the terrible, unpopular policies they believe in – like Democrats did with Ryan’s budget.

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