Today Barack Obama nominated Alan Krueger to be the next chairman of the President's Council of Economic Advisers; staying inside the circle of his very small, tight economic team. Krueger previously served as the Assistant Secretary of the Treasury for Economic Policy, which means he was the economic adviser to Secretary Tim Geithner - who advised Barack Obama.
Somebody at the White House must actually think all of that economic advice over the last 31 months has actually worked.
It hasn't. Even the excessively reliable defender of the Administration, the Washington Post, admits that Obama's economic policies have led to a "crisis of confidence" among American consumers and businesses alike.
Like the President, Krueger is a fan of schemes to increase "revenue" to the federal government, particularly a European style VAT, or Value Added Tax.
The week before Obama was inaugurated, Krueger published an op-ed in The New York Times promoting a VAT - "a 5 percent consumption tax" as he called it - as a way to lead America out of the recession that was already well underway.
Providing an open window to the perverted logic of liberal, Keynesian economists, Krueger wrote that "greater revenue flowing into federal coffers would probably help lower long-term interest rates because the government would need to borrow less down the road, and further bolster the economy." Really? By that logic, why just a 5 percent tax? Wouldn't a 10 or 20 percent VAT really, really "bolster the economy?"
Krueger suggested implementation of his new tax be delayed two years serving as a kind of hammer over the consumer's head. The threat of the pending tax, he argued, would "encourage households to spend money now, rather than after the tax is in place," according to his reasoning. Krueger went on to explain how raising taxes would also create jobs and grow the economy. "Along with the rest of the recovery package (Obama's $800 billion Stimulus was already on the Congressional table by that time), this would help jump start spending in the economy and thereby increase production and employment." So, scare people into spending what little money they might have left in the middle of a deep recession, and then whack them with a new tax just about the time you think they might be getting up off the mat?
Obama must have been sufficiently impressed by Krueger's op-ed because shortly after it published he tapped the Princeton professor to be Geithner's right-hand man. Now, Krueger is moving into the big chair as the third chairman of the CEA. He'll succeed Austan Goolsbee, an original member of the three person CEA, who succeeded Christina Romer. The same week as Krueger's op-ed was published, Romer released the now infamous report on Obama's economic stimulus plan in which she said the unemployment rate would be kept under 8 percent and up to 4.1 million new jobs would be created by Q4 of 2010.
The unemployment rate jumped above 8 percent the very next month, peaked at 10.1 percent in October, 2009, and is still frozen above 9 percent which is 2.5 percent greater than she predicted it would be at this time. As for jobs created - she missed that by 7 million.
The nomination of Krueger is a clear signal to the markets and to the voters to expect more of the same from the Administration. More government programs, more tax increase proposals, and more of a direct assault on jobs and our economy. Instead of a change of direction and seeking new advice, Barack Obama is doubling down on economic policy that has already proven to be disastrous.
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