There are three ways to increase aggregate demand:
1)”Prime the pump”–transfer wealth from the private economy to the public and then redistribute.
2) Have the central bank print more colored green paper.
3) Cut taxes.
Numbers one and two have been tried and we have little to show for it. Jan. 1, 2011 will be very interesting when taxes bump up again.
With less people working and paying taxes (the real unemployment rate is closer to 17% IMHO), those that are working will have to take up the slack with more taxes to pay for all the promises made by the political class. Somebody needs to stop shoveling before the hole gets too deep.
I have noticed on many liberal blogs of late an unmistakable air of denial on how policies by the Obama administration has essentially hurt our economic recovery. Instead, they have tried desperately to find an answer for the lack of job growth and the precipitous economic recovery. Some say that the stimulus wasn't enough, others say that this sluggish, limping growth is the "new normal" because of competition from China, Brazil and India---developing nations with economies that are half the size of the U.S. economy combined! (The total GDP of Brazil is roughly the GDP of the state of Texas!) I've even seen posts praising the Obama administration for saving us from the Great Depression (by the mastery of Tim Geithner!) that would have surely followed if a stimulus would not have been passed; this, of course, ignores the sad fact that the stimulus was essentially a giant wealth transfer scheme that pushed off the inevitable reckoning which fast approaches.
I am convinced that many of these liberal bloggers refuse to see the coming economic storm and the failure of Obama's interventions into the economy because it is simply too psychologically painful to admit that their man was wrong or that liberal fantasies of wealth distribution will not make us more prosperous. So it continues.