House Republican Leader John Boehner's call this week for the resignation of Treasury Secretary Geithner and senior White House economics advisor Lawrence Summers was more than a brilliant stroke of political gamesmanship, though of course it did underscore the vast disaster that is Obamanomics just as the fall campaigning season gets underway.
It was also the very first recognition that even as the election of 2006 forced the resignation of Donald Rumsfeld as Secretary of Defense, the looming electoral rebuke to the Democrats should result in the rapid exit of both Geithner and Summers. You cannot fire the president, but a clean break with failed policies can only be signaled by the dispatch of the senior-most officials responsible for a failure or in this case, a fiasco.
Unlike the "supply side economics" that lay behind the Bush tax cuts as well as those of Reagan and Bush, there was no coherent theory behind President Obama's toxic mix of massive spending on special interests, an enormous expansion of the regulatory burden on business via Obamacare, and the job-killing insistence of the enormous tax hikes scheduled for 1/1/11. Obamanomics are genuinely "placebo economics," never intended to actually cause a cure for the country's economic ills so much as to perhaps trick Americans into feeling like the country was past the fallout of the housing bubble and the panic, and thus to resume the pattern of investment, risk and return that fuels democratic capitalism. The equivalent of a "sugar high" fueled by $850 billion in "stimulus" as well as the massive hikes in baseline spending from 2007 forward was supposed to trigger real economic growth. So what if census jobs and spikes in federal and state employment aren't the sort of jobs that raise real national GDP and thus real growth --placebo economics was supposed to induce recovery through a sort of mass psychological pump-up.
It didn't work. It couldn't work. Because capital isn't sentimental. And it isn't anchored to America. It can flee to China or India or anywhere where real economic growth is encouraged. Just as Saudi sheiks head to the Cleveland Clinic when real hearts need real surgeries, capital seeks governments with real growth policies, not incentives to winterize homes.
Now Americans are staring massive tax hikes in the face, and the Geithner/Summers team is insisting that those hikes must occur. Obamacare is rolling out across the land, crushing incentives to expand workforces under its tower of ambiguous mandates and almost certain hikes in per-employee costs for those businesses that don't dump their people into the state exchanges.
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