Obama Speaks on the Economy
President Obama is currently giving a major speech on the economy. The President has already addressed head on the issues that most Americans are concerned with and has focused on dealing with all the counterarguments to his massive stimulus. Here are a couple of points that struck me early on in his speech. Please note that my knowledge in economics is virtually nil so I would love to hear any responses to these points.
In response to criticism over the huge amounts of spending, Obama noted that economists on both the left and right agree that spending is imperative when a country is in a recession. Since people themselves are reluctant to spend in hard times, businesses suffer and jobs are lost. Spending, he argued, is thus necessary to fill the void left by a lack of confidence in the economy.
Obama also addressed the common cry of “where’s my bailout?” While noting that this line of thinking makes sense morally, since saving those responsible for the economic mess does not seem right, the President noted that bailing out individuals will not go as far in stimulating the economy as bailing out banks. Money given to banks, according to Obama, will lead to exponential growth in lending and thus stimulate the frozen credit market more so than bailing out the people themselves.
The speech is still ongoing as I write this. But I think that, so far, this has been a really good speech. There has been virtually none of that campaign rhetoric that I voiced some frustration with a few weeks back and he seems to be discussing the nuts and bolts of his economic policy with Americans.
UPDATE: Ron Paul was just on CNN responding to the speech. Addressing the first point above, he noted that individuals are correct to cut back on spending in such economic conditions. However, he thinks that governments should not be any different. More spending, according to him, will prolong the crisis.
I love how Obama and Paul both cite to history’s lessons in justifying their opposing positions. Sometimes it seems that if history has taught us anything, it is that we all invent our own.
