Editorial do WSJ
If President Obama's economic policies have had a signature flaw, it is the conceit that by pulling this or that policy lever, by spending more on this program or cutting that tax for a year, Washington can manipulate the $15 trillion U.S. economy to grow. With his speech last night to Congress, the President is giving that strategy one more government try.
This is not to say that Mr. Obama hasn't made any intellectual progress across his 32 months in office. He now admits the damage that overregulation can do, though he can't do much to stop it without repealing his own legislative achievements. He now acts as if he believes that taxes matter to investment and hiring, at least for the next year. And he now sees the wisdom of fiscal discipline, albeit starting only in 2013.
Yet the underlying theory and practice of the familiar ideas that the President proposed last night are those of the government conjurer. More targeted, temporary tax cuts; more spending now with promises of restraint later; the fifth (or is it sixth?) plan to reduce housing foreclosures; and more public works spending, though this time we're told the projects really will be shovel-ready.
We'd like to support a plan to spur the economy, which is certainly struggling. Had Mr. Obama proposed a permanent cut in tax rates, or a major tax reform, or a moratorium on all new regulations for three years, he'd have our support. But you have to really, really believe in hope and change to think that another $300-$400 billion in new deficit spending and temporary tax cuts will do any better than the $4 trillion in debt that the Obama years have already piled up.
We've had the biggest Keynesian stimulus in decades. The new argument that the 2009 stimulus wasn't big enough isn't what we heard then. Americans were told it would create 3.5 million new jobs and unemployment would stay below 8% and be falling by 2011. It is now 9.1%. But this stimulus we are told will make all the difference.
Mr. Obama spoke last night as if he is a converted tax-cutter, asking Republicans to expand and extend the payroll tax cut that expires in December for one more year. Along with tax credits for certain businesses that hire new employees, he says this will cut unemployment, and no doubt it will lead to some more hiring.
But what happens in 2013 when those tax rates expire and Mr. Obama pledges to hit thousands of those same small businesses with higher tax rates on income, capital gains and dividends? He seems to think businesses operate only in the present and will ignore the tax burdens coming at them down the road. This is the same reasoning that assumed that postponing ObamaCare's tax and regulatory burdens until 2014 would have no effect on business hiring in the meantime.
The same logic applies to Mr. Obama's claim that everything in his new proposal is "paid for." Yes, but only according to the usual 10-year Washington budget window that pushes all of the hard choices into the future, in this case after the election. So Mr. Obama gets to spend more now while promising to save later. This is also how the Administration claimed that a new $1 trillion health-care entitlement would reduce the deficit. It also means he can put more money in the pockets of dues-paying teachers unions and government workers.
The larger political subtext of Mr. Obama's speech is that if Congress doesn't pass his plan, he'll then campaign against Republicans as obstructionist. Thus his speech mantra that Congress should "pass it right away." This ignores that Mr. Obama has been the least obstructed President since LBJ in 1965 or FDR in 1933, which is how we got here.
He passed $830 billion in stimulus, $3 billion for cash for clunkers, $30 billion in small business loans, $30 billion for mortgage modification, the GM-Chrysler bailouts, ObamaCare, Dodd-Frank, credit card price controls, Build America Bonds, jobless benefits for a record 99 weeks, and more.
The only priorities that a Democratic Congress blocked were cap-and-tax and union card check, and both of those would have further damaged growth and jobs. Even last December, after Republicans had retaken the House, Mr. Obama won his one-year payroll tax cut, more jobless benefits and most of what he wanted.
The unfortunate reality is that even if Republicans gave Mr. Obama everything he wanted, the impact on growth would be modest at best. Washington can most help the economy with serious spending restraint, permanent tax-rate cuts, regulatory relief and repeal of ObamaCare. What won't help growth is more temporary, targeted political conjuring.