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Obama
fights fire with gas
by backstabber Robert Reich
Tthe 1995 playbook is irrelevant.
In 1995 the economy was roaring back to life. The recession of 1991
had been caused (as are most recessions) by the Fed raising interest
rates too high to ward off inflation.
So reversing course was relatively simple. Alan Greenspan and the Fed
cut interest rates.
In 2011 most Americans are stuck in the Great Recession, which was
caused by the bursting of a giant
debt bubble. The Fed can't reverse course by cutting interest rates;
rates have been near zero for two years.
Big American companies are sitting on almost $2 trillion of cash
because there aren't enough customers
to buy additional goods and services. The only people with money are
the richest 10 percent whose
stock portfolios have been roaring back to life, but their spending
isn't enough to spur much additional hiring.
The Republican bromide -- cut federal spending -- is precisely the
wrong response to this ongoing crisis,
which is more analogous to the Great Depression than to any recent
recession. Herbert Hoover responded
the same way between 1929 and 1932. Insufficient spending only deepened
the Great Depression.
The best way to revive the economy is not to
cut the federal deficit right now.
It's
to put more money into the pockets of average working
families. That's the Bartcop Tax Plan.
Not until they start spending again
big time will companies begin to hire again big time.
Don't cut the government services they rely on -- college loans, home
heating oil, community
services, and the rest. State and local budget cuts are already causing
enough pain.
Obama apparently didn't know that when you lie down with backstabbers you get backstabber fleas.