With the throw-the-bums-out results of last week's elections and unemployment breaking through 10 percent, Washington politicians are desperate to show that they're doing something about jobs.
Unfortunately, what they're proposing is to spend a lot of money they don't have in ways that won't work to help too many people who are neither desperate nor deserving.
Topping the list of idiotic ideas is the bipartisan push to reinflate the housing bubble by not only extending the tax credit for struggling first-time home buyers for six months but also expanding it to another "neglected corner of human misery," as the Heritage Foundation's Ron Utt so aptly put it: affluent homeowners who want to trade their current places for something better.
This $10 billion boondoggle is nothing more than a giveaway to the real estate industrial complex and people who could afford to buy a new home anyway. Even its most prominent supporters acknowledge that of the first-timers who have already claimed the credit, only one in five wouldn't have bought a home without it.
This is one of those strategies that are as nonsensical in theory as they are in practice: trying to put a floor under declining home prices by making houses more affordable. To the degree that it works, the benefits will inevitably wind up in hands of the sellers — but not the buyers — and not before the agents, appraisers, lenders and insurers have taken their cut.
It is disappointing enough that President Barack Obama and his team of crackerjack economic advisers have not had the wisdom or courage to oppose what any first-year graduate student would recognize as truly lousy policy. But perhaps that's because the panderer in chief is himself knee-deep in stimulus hokum of his own with his proposal to shower Social Security recipients with a $250 cost-of-living increase this year even though their cost of living has actually declined. At a cost of $14 billion in borrowed money, it's a grossly inefficient way to stimulate the economy, create jobs or even boost consumer confidence.
At a time when 15 million workers are underemployed, the budget deficit is at record levels, teachers are being laid off and state support of higher education is declining, borrowing $14 billion more to send $250 checks to every senior, regardless of income, is as economically indefensible as it is politically cynical, and downright immoral besides.
As difficult as it is for voters and politicians to accept, government cannot — and does not — control our market economy. The truth is that robust growth and job creation will happen only once we've completed the painful and disruptive process of deleveraging, restructuring and rebalancing the economy so that we consume less than we produce, and put something away for the future. The government can, and has, taken steps to smooth that process and make sure that it does not spin out of control, while providing some support for those who have lost the most. But unless we reinflate the credit bubble and the bubble economy that it spawned — a big mistake — there is no way to avoid an extended period of uncomfortably slow growth with uncomfortably high employment as a large, complex, dynamic market economy heals itself.
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