Seeking to revive the economy (and his reelection prospects) President Obama has been on Midwest swing this week, talking about jobs. Today, the White House announced the President will make a major speech after Labor Day focused on (what else?) job creation.
The White House says the Sept. 5 speech will include new ideas beyond those already mentioned, including an extension of the payroll tax cut, tax credits for hiring veterans, a further extension of unemployment benefits and the like.
But "it's too late for stimulus," according to David Stockman, former budget director for Ronald Reagan. "Even though it's nice; you can't afford it. The credit card is maxed out — it's done."
America has "reached the end of the road" when it comes to deficit spending and "I believe Obama doesn't get it," Stockman says.
What's different between today and the early 1980s, when the Reagan administration used deficit spending to pay for the arms race vs. the USSR even while cutting U.S. tax rates, is the state of America's balance sheet, he says.
"If you were at 30% debt-to-GDP like in 1980, it's one thing to add a little more," but not when the debt is at 100% of GDP and projected to rise from here, he says. "It's time for a wake up call — you can't keep burying yourself in debt."
Instead of throwing more money at the problem, the best thing the government can do right now is "get out of the way and let the private economy slowly heal itself," according to Stockman.
The former Congressman says it's also time for elected officials to level with the America people: "We had a party for 30 years [and] now we have the hangover. It's going to be painful [and] difficult but we have to work our way through."