Obama’s Anti-Stimulus: His Energy Policies Take Money Out Of Economy
Photo Credit: Win McNamee“I have to tell you that there are some Democrats, for example, who represent states or districts that are heavily reliant on old power plants and are more heavily manufacturing based,” President Obama said during a Google online chat session with the public on Friday. “And the truth is that if you produce power using old power plants, you’re going to be emitting more carbon, but, to upgrade those plants means energy is going to be a little more expensive, at least on the front end.”
Naturally, Obama understated the costs involved in upgrading power plants and switching to new sources of energy. But his remark is true in its essentials: In exchange for very modest reductions in carbon emissions, his policies require consumers to pay higher upfront prices for electricity.
Now compare Obama’s statement to the theory behind his stimulus package — both the $800 billion package he championed and signed in 2009 and the additional stimulus he has since asked Congress to enact. The assumption underlying his proposed and enacted deficit spending, expansion of entitlements (such as food stamps) and demand-side tax breaks as stimulus is that Americans have a temporary cash-flow problem. The idea is that because people don’t have enough money in their pockets, commerce is suffering, causing hiring to lag. So by providing a small pay increase to workers and extra business for contractors, the Recovery Administration was supposedly alleviating this temporary cash crunch so as to ease the economy back onto the road to recovery.
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