In the July 27, 2012 Wall Street Journal the editors write The 1.5% Presidency


The tragedy of the Obama Presidency is that it ignored the supply side: the producers, the risk-takers, the salary earners who put in 50 and 60 hours a week to get ahead. They have been battered by Washington, and no matter how much government tries to conjure growth with more spending and easier monetary policy, businesses won’t produce and workers won’t work if government threatens to confiscate returns.

Banks aren’t lending as much as they might in no small part because of Dodd-Frank’s penalties and regulations. Investors aren’t investing or are sending their money abroad because the President is promising to wallop them with huge tax increases on January 1. Businesses aren’t purchasing as much new equipment, or hiring as many workers, because they don’t know what the real costs will be from new regulation and ObamaCare.

A new report by the Progressive Policy Institute—run by Democrats—finds that if business investment had tracked the normal trend rate during this recovery, investment would be $1.4 trillion higher. The report fingers regulation on business and American investors finding better returns abroad. Yet Mr. Obama’s solution is to raise the capital gains and dividend tax rates.

In this policy environment, the miracle is that the U.S. economy is still growing as much as it is. That is a tribute to the natural desire of Americans to better themselves, to create the next Apple, or to discover the next technique for pulling natural gas out of shale rock.


The demand vs supply controversy is juvenile.  Stimulating demand while suppressing supply is self defeating.  The editors arguments have been repeated in this blog for years, and it still stuns me as being so obvious that our policy mongers must be absolutely clueless.  To the extent that demand stimulus can work it does make a difference what it is spent on.  We use infrastructure today that was built from the stimulus of FDR.  We have something to show for it 3/4 of a century later. Compare that to to 99 weeks of unemployment and the growing number of Solyndras.