Apparently, President Obama and his economic team is so good they don’t even have to do anything to end a recession. The Washington Post reports today that Treasury Secretary Tim Geithner and chief Administration economist Lawrence Summers are doing the talk show rounds taking credit for the end of the recession (even though it isn’t over yet).
“In appearances on weekend talk shows, Obama’s advisers gave a first look at how the administration seeks to navigate a tricky period for communicating about the economy. They wish to advertise the signs of economic improvement while not appearing out of touch with the millions of Americans who remain jobless.
“The administration will keep using government policy to boost the economy in the short run, the advisers indicated, but will contain the deficit in the longer run, even if it means higher taxes. Treasury Secretary Timothy F. Geithner refused to rule out that possibility, saying the administration will “do what it takes” to bring the deficit down.
“To reconcile the apparent tensions, they simultaneously tried to remind Americans of how bad conditions were at the beginning of the year, claim that the economic stimulus package they championed is part of the reason things are looking better now and acknowledge that the job market is likely to get worse before it gets better.
“Six months ago, the economy was in a nose dive, people were talking about the possibility of another depression, the statistics all suggested a vertical decline,” said Lawrence H. Summers, the top White House economic adviser, on “Meet the Press.” “None of that is the situation right now,” he said.
Let’s see: the so-called stimulus package wasn’t even a stimulus package. As we have discussed here on numerous occasions, the stimulus pacakge stimulates very little except long-term spending commitment for government programs, and most of the so-called “impact” isn’t expected to hit the economy until 2010 and 2011. Moreover, less than 10 percent of the stimulus package has been spent.
So, as the economy was already gaining momentum even as the Obama Administration was gearing up.
But don’t worry. It may not last. Middle-class tax increases are probably not too far off to raise cash to pay for the deficits:
“Both Summers and Geithner argued that the Obama administration will contain those deficits. Geithner, under repeated questioning from “This Week” host George Stephanopoulos, refused to rule out tax increases to close the long-term budget gap.
“We’re going to have to do what it takes” to contain the deficit, Geithner said.