Obama overrates spending

President Barack Obama ran a successful campaign in 2008 against George W. Bush. Yes, yes, John McCain’s name was on the ballot, but that was a detail. Obama campaigned against Bush. McCain even laughed about it at the Alfred E. Smith dinner, joking that Obama’s “pet name for me” is “George Bush.”

The president is hoping to reprise the same race in 2012. Speaking in Iowa last month, he said of Republicans: “They either want to do nothing at all or they want to double down on the same failed policies that got us into this mess.”

So it’s the anti-Bush campaign, version 2.0. Will it succeed? How can you run for re-election on the hope that voters won’t notice you’ve been in the White House for four years? Some Democrats fondly recall Franklin D. Roosevelt’s 1936 re-election. Roosevelt brought back the ghost of Herbert Hoover — who would remain a prop of Democratic campaigns for two decades — and campaigned vigorously against the rich, proposing an “undistributed profits tax” and a “wealth tax.” He won by a landslide.

While we now know that the New Deal failed to end the Great Depression (and arguably prolonged and deepened it), 1936 voters lacked that perspective. The unemployment rate had been reduced from 24.9 percent in 1933 to 16.9 percent in 1936 and was continuing to decline during the election year. (It bounced up to 19 percent in 1938.) Under Obama’s tenure, the unemployment rate spiked — arguably, for reasons that predated Obama — but has remained stubbornly high and is rising (very much attributable to Obama).

Unhappily for the president, voters are aware that he came to power with a House and Senate controlled by his party and that his agenda was duly enacted. When his policies failed to deliver on the promises of prosperity and growth, Obama undertook his protracted and creative search for scapegoats. We’ve been told that the economic policies of the Obama administration failed to deliver because a) the recession created by Bush’s policies was deeper than anyone understood, b) Japan experienced a tsunami, c) the Arab Spring roiled the Middle East, d) ATMs have replaced bank tellers, e) Europe is facing a debt crisis, and f) Republicans refuse to pass his jobs bill.

Last week, he offered that the private sector was “doing fine” and that the public sector needed to spend more money to improve the overall economy. The president really does believe that prosperity comes from government spending. Throughout his presidency, he has extolled government spending programs — from the interstate highway system to NASA to “clean” energy — as representing the best in the American character. Other leading Democrats agree. In 2010, Nancy Pelosi described unemployment checks as “one of the biggest stimuluses to our economy.”

The percentage of government spending that goes to infrastructure, basic research and other “investments” that are arguably conducive to economic growth is infinitesimal. In 2010, two-thirds of the federal budget went to transfer payments — Medicare, Medicaid, Social Security and unemployment. Adding payments to federal civilian workers and the military, checks to individuals consume 80 percent of the budget. Most of the rest goes to interest on the debt and other federal departments, chiefly the Departments of Health and Human Services and Justice, as well as the Department of Housing and Urban Development.

Government hiring may be necessary, but the idea that it is stimulative is perverse. In order to hire a teacher or a diversity specialist or a tax collector, the government must extract money from taxpayers to pay their salaries. The sum total of water in the pool does not increase when you scoop water from one end and pour it into the other. If the government worker is inefficient or incompetent, you are subtracting from the total water level. The Keynesian “multiplier” has been shown to be an illusion.

If a private employer, by contrast, creates a new business and hires people, he has taken nothing from his fellow taxpayers and is creating wealth that will support those he employs, as well as boost tax receipts to the government.

If governments could spend their way to prosperity, Greece would be an economic powerhouse and California would not be facing a fiscal crisis. If governments could spur the economy by borrowing and spending, there would be no European debt crisis to disturb the sleep of David Axelrod. In fact, there would be no need for the Buffett Rule or any other tax Obama has demanded.

Didn’t liberals scoff mercilessly at the caricature of supply-side economics — the supposed claim that tax cuts would pay for themselves? Now they tout spending yourself into the black without a hint of embarrassment.