“Morning Joe” had as guests this morning both Rep. Aaron Schock (R-IL) and Rep. John Shaddeg (R-AZ). These are two of the more thoughtful, reasonable Congressional members of either party. What struck me, though, is the formulation of economic policy that they were putting forth.

Rep. Shaddeg was being asked one of the media’s favorite questions these days, namely, why it is that extending unemployment benefits has to be “paid for,” but extending the Bush-era tax cuts does not. The response — predictable from either party — was that this was all about jobs. Shaddeg made the point that unemployed people don’t spend those unemployment benefits; they hold on to the money for as long as they can. Rep. Schock’s contribution was that the unemployed don’t hire people, business owners do.

To me, this is a complete distortion of economic reality. Of course business owners do the hiring, but why do they hire? They hire for one reason and one reason only: they need the workers to meet the demand for their goods or services. Certainly not because their taxes are lower (or higher). Where does the demand for goods and services come from? From consumer spending, mostly. Create more consumers, or increase the spending of the consumers we have, and demand goes up… and then hiring goes up. It’s pretty simple really. Except somehow it confounds the Washington crowd.

I am not making the case for or against extending unemployment benefits, nor the case for or against extending tax cuts. My point is that we will never get economically sound policy out of Congress if our elected representatives continue to put forth economic nonsense as the basis for policy.

Put very simply, we have to choose between more job creation or more debt reduction, at least in the short run. Republicans have come into town promising both. That’s nonsense. Those two policy aims, each important and valuable in its own right, work at cross purposes, at least in the short run. Pick one. You want job creation? Then extend unemployment benefits and extend the tax cuts — but be honest and tell the American people that it is necessary to raise deficits in the short term to stimulate those jobs. You want debt reduction? Then cut off the unemployment benefits and let the tax cuts expire — but be honest and tell the American people that job creation will suffer in the short run.


President Obama is coming under fierce attack for not taking a stronger hand in the Gulf oil disaster. When a Democratic president gets James Carville yelling at him, you know things are reaching a frenzied peak.

The irony of this is that this is the president who has been accused of maneuvering disasterous federal takeovers of the private economy in one action after another. Bailouts to the auto manufacturing industry. Bailouts to Wall Street. Government takeover of healthcare. Cap-and-trade proposals. Each time, he has been excoriated by political opponents on the right, branded as a Marxist, or at least a socialist, leading this country down a catastrophic path to destroy the private sector and quite possibly all of America.

What has been the response of Congressional Republicans to the Gulf oil crisis? Well, Mike Pence (R-In) was on Morning Joe just now. His narrative was, closely paraphrasing here, Obama needs to stop acting as if the buck stopped with BP and be more like Harry Truman: “The Buck Stops Here.” Isn’t that deeply ironic, coming from Rep. Pence? Pence is a devoted limited government conservative. Mike Pence says, “Conservatives know that if you reject these principles of limited government and urge others to reject them you can be my ally, you can be my friend but you cannot call yourself a conservative.” Mike Pence said during the healthcare debate:

“You bet every member of Congress who votes for this bill ought to read it, read it thoroughly, and understand that what we’re looking at here amounts to nothing more than a government takeover of our health care economy, paid for with nearly a trillion dollars in new taxes on individuals and small businesses. And it must be opposed.”

Which is it? Is it the role of government to step in and correct the abuses, excesses, missteps and externalities of the private sector? Or is it not? Why should government not bailout GM, but it should handle the Gulf oil crisis? What exactly is the conservative paradigm of limited government, and how is it to be consistently applied?

I know that Geithner was much maligned during the whole financial sector crisis. He clearly was unready for prime time when it came to being the Obama administration’s public face of the situation, not to mention having too many fingerprints from his Bush Administration days on things that didn’t work out well. So I was very surprised to see he was appearing on MSNBC’s Morning Joe program today. And even more surprised to watch the segment, and see how steady and thoughtful and reasonable he was. I was very impressed. Republican, small-government Scarborough was impressed as well.

Watch for yourself. What do you think?

Watching the Obama Administration sometimes is like being on a roller coaster. At any moment, your grip is tight, your teeth are clinched and you’re screaming for mercy. But I have to give him and his team credit. He is steadily and thoughtfully and methodically working through the huge issues of our time. Listen to this Geithner interview with an open mind, and I think you have to give serious credit to Obama’s strategy for handling the economic crisis and instituting financial reforms for the future. This guy is good.