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How Obama’s Big Economic Lie Caused Our Inflation Crisis
“We cut back on the stimulus dramatically and we stayed in recession for five years”.
By Daniel Greenfield
Conspiracy theories and lies have a unique power to reshape the human mind. The things that we believe, even when we initially know that they’re a convenient rationalization, become a part of us. And eventually we come to build our entire worldview around a lie that we told long ago.
That’s the story of Russiagate, a bizarre conspiracy theory invented by the Clinton campaign and allies in the Obama administration that virtually every Democrat now believes is true. And it’s quite likely that Hillary Clinton, whose people made it up, also came to believe it’s true.
It’s also the story of the inflation crisis.
To understand how we got here, it helps to remember the last time a Democrat took over the White House during a troubled time with a mandate to save the economy. Time Magazine clumsily photoshopped him into a picture of FDR on its cover. The messianic ecstasy however soon gave way to frustration because Obama’s economic triumph never arrived.
The misnamed Recovery Act was a corrupt disaster, but, more relevantly for Democrats, it didn’t deliver anything meaningful and foreshadowed Obama’s transformation from the chosen one to just another politician. While Obama still did a great deal of damage, the FDR moment never came, and without it there was no momentum for a New Deal or a grander economic agenda.
Democrats and their think tank and academic allies refused to admit that the Recovery Act was a mistake. Instead, like all leftists, they insisted that the experiment hadn’t been properly tried. Just as Communism can never fail because it’s never been truly tried, the massive stimulus had never been properly tried either. The only problem with the Recovery Act was that it wasn’t big enough. Had Obama and the Democrats pulled off a truly huge package, they would have gotten their New Deal, held Congress and completely transformed America.
That excuse became the big lie that most people forget, but that the media occasionally kept warm and that Obama administration veterans carried with them into the Biden White House.
The rest is history and $6 eggs.
“The way I see it, the biggest risk is not going too big, it’s if we go too small. We’ve been here before. When this nation hit the Great Recession that Barack and I inherited in 2009, I was asked to lead the effort on the Economic Recovery Act to get it passed,” Biden assured the country in his speech. “But it wasn’t enough. It wasn’t quite big enough. It stemmed the crisis, but the recovery could have been faster and even bigger.”
Senator Schumer scoffed to CNN, “We’re not going to make the mistake of 2008 and 2009 and do such a small measly proposal that it won’t get us out of the mess that we are in right now.”
The small measly proposal that Schumer was ridiculing had been a massive $800 million.
He explained that the Democrats wouldn’t negotiate with Susan Collins, Murkowski or Romney because, “we cut back on the stimulus dramatically and we stayed in recession for five years.”
Biden and Schumer’s remarks showed just how thoroughly the Democrat elite had absorbed the ridiculous excuse for Obama’s economic failures. Even before the election, insiders were repeating the meme that Obama’s stimulus plan had been too small.
“Joe Biden doesn’t want to come into office and sit on a sloggy economy for four, six, eight quarters,” Jared Bernstein, who would become Biden’s chief economist, promised.
“Massive as it sounds, the next Covid bailout deal may already be too small,” Politico suggested.
Like a lot of bad Democrat ideas, the “too little spending” narrative began in part with Paul Krugman, the New York Times hack who has never failed to be wrong about anything, including his spectacular claim that “by 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
“This wasn’t a test of fiscal stimulus, even though it has played out that way in the political arena: the whole thing was obviously underpowered from the start,” Kruguman contended.
In, “Hey, Small Spender”, the absurdly wrong economist insisted that “the stimulus wasn’t actually all that big compared with the size of the economy” and that too much of it had been focused on tax cuts and “wasn’t mainly focused on increasing government spending.”
“If job-creating government spending has failed to bring down unemployment in the Obama era, it’s not because it doesn’t work; it’s because it wasn’t tried,” Krugman clamored.
In 2020, he was still arguing that, “Obama paid a heavy political price because recovery was too slow thanks to inadequate stimulus.”
In the years since, Democrats would point to aborted proposals for a $1.8 trillion stimulus plan and argue that it would have turned everything around. It’s no coincidence that Biden’s American Rescue Plan, one of the engines of the runaway inflation, crashed in at $1.9 trillion.
The Obama people were trying to make up for what they believed went wrong in 2009.
Communism hadn’t been properly tried and they tried it to the tune of $1.9 trillion.
What had actually happened in 2009 was that the leftists who championed government spending failed and were allowed to write a narrative in which they were right all along. Their conspiracy theory claimed that history would have come out very differently if not for Obama’s cowardice and Larry Summers introducing cautionary notes in the administration.
“So many bad things have followed from Obama’s caution back then. The course of history could have been very different,” Krugman mournfully complained in 2020.
This time around, they did it their way.
The Biden administration ignored Summers and went all in. Now it’s hunting around for someone to blame. According to a Bloomberg article, Biden has been yelling at his advisers and wondering if they “had paid too little heed to warnings that the $1.9 trillion American Rescue Plan would flood the economy with too much cash, acting as kindling for inflation.”
That was followed by the familiar coda. “If Biden and his economic aides, including Deese and Jared Bernstein, erred on the side of a larger stimulus it’s because they all worked in the Obama White House following the global financial crisis and witnessed firsthand how a too-small rescue package played a role in delaying a labor market recovery.”
The Biden administration had come to believe their own lies and excuses from a decade ago. And they will come up with new lies, excuses, and conspiracy theories to explain their current disaster. Eventually its veterans will learn to believe them and turn them into future policies.
“There’s a pretty good probability that we’ll look back on how America handled the pandemic shock, mostly under Biden, and see it as a big success story,” Krugman has continued to argue. He also denied the existence of inflation and is now busy rejecting the reality of a recession.
But for once Krugman is right. Whatever happens, he and his allies, and the rest of the media will look back and impose a narrative on the misery that we are all going through. Eventually they may decide that the trillions spent also weren’t enough and we should have done more.
And when the time is right, they will try to do it all over again.