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Special Report

Obama Administration Clueless on the Economy?

The evidence mounts that no one in the high councils of the Obama administration has any idea of how to get the economy out of its current rut.

Senior adviser David Axelrod recited the familiar litany on Sunday -- we inherited a huge mess from George W. Bush; the stimulus really has made things better; yes, we need tough new financial regulations to avert another scandalous Wall Street collapse.

Axelrod insisted the administration is not anti-business and it may not be. But the president has never worked for -- let alone run -- a business and nearly all those around him are from the worlds of politics, government and academia. The possibility that businesses are not investing and hiring because of deep uncertainty about everything from taxes to credit to regulation seems lost on them. They believe deeply that the driving force in a robust economy is aggregate demand and that dispensing cash through government spending is the way to stimulate that demand.

But what's needed now is not just investment to meet current demand for products. What's needed now is investment in the expectation that the products produced will themselves create demand and that the rewards for taking the risk will not be taxed away by a government insatiable for revenue to cover its spending and insistent on ever more regulation to keep greedy businesses in line.

In other words, lower taxes, lighter regulation and less government spending -- the exact opposite of the policies now in place.