Is That All You've Got, Mr. President?

Bill Hobbs
By Bill Hobbs | January 29, 2012 | 2:24 PM EST

What a difference a few days makes.

A little over a week ago, the Obama administration was crowing about the economy creating 200,000 jobs in December, as if that was a sign that the Obama recovery was finally starting to be a feel like a recovery rather than like the recession that preceded it.

Now, the White House has got to be a bit panicky as the latest economic figures show the economy isn't growing as fast as anticipated. The economy grew 2.8% in the fourth quarter - less than the consensus economists forecast of 3% growth.

The White House's response? Bloomberg reports: "The White House called anew for passage of a payroll tax cut extension after the government reported less than expected growth in the economy in the fourth quarter of 2011."

That's it? The Obama administration's immediate reaction is: Urge extension of the payroll tax cut to the end of the year.

Republicans in Congress tried to do that in December, but were blocked by Obama's insistence that it be "paid for" by raising other taxes. Mindful of the massive spending and debt increase under Obama, Republicans suggested it be "paid for" by reducing spending a tiny bit somewhere else in the budget. And by "budget" I don't mean "budget," because, thanks to the Senate Democrats, it has been more than 1,000 days now since the Senate passed a budget.

Extending the payroll tax cut - currently set to expire Feb. 29 - until the end of the year would leave about $40 extra in the average worker's biweekly paycheck. Extending the tax break is “the most pressing matter” on President Barack Obama’s agenda, according to spokesman Jay Carney.

While you can't begrudge anyone for wishing they had another $40, it is simply bizarre for the White House to act like extending the tax break is the key to reviving the economy.

Extending the payroll tax cut will leave zero additional dollars in the pockets of the tens of millions of Americans who are unemployed, and the six million Americans who have simply become so discouraged by the bleak Obama economy that they have stopped looking for work.

Extending the payroll tax cut won't leave any extra money in the paychecks of the 20,000 construction workers building the Keystone XL oil pipeline because, well, Obama killed the pipeline project.

Extending the payroll tax cut won't reduce the federal deficit - rather, it will blow another multibillion-dollar hole in the Social Security Trust Fund.

Extending the payroll tax cut won't help a single business anywhere better cope with the crushing impact of ObamaCare and Obama's torrent of regulations.

Extending the payroll tax cut won't do much at all to turn the housing market around. Home sales dropped "unexpectedly" in December,  capping off 2011 as the worst year - in history - for home sales in America.

It might, however, help Americans pay for groceries and gas. The prices of those things have skyrocketed during the three-year economic disaster known as "the Obama economic recovery." Gasoline, up 83 percent; ground beef up 24 percent, bacon up 22 percent. (Not only have millions of Americans given up trying to find a job so they can bring home the bacon, the price of bacon is rising. Apparently, spending hundreds of billions of dollars on "pork" to "stimulate" the economy does not positively impact the bacon sector).

But the fact that extended the payroll tax cut is "the most pressing matter" on Obama's agenda to address chronic high unemployment is a rather disheartening response to news of slower-than-expected economic growth in the fourth quarter - and signs that the economy may not grow in 2012 much above last year's dismal 1.7 percent growth rate.

Economists generally say the economy must grow at least 2.5 percent annually to generate enough jobs growth to recoup jobs lost during the recession (and during the sluggish Obama recovery).

That 2.8-percent growth rate in the fourth quarter sounds good, but, as Reuters reports, two-thirds of the increase was due to the build-up in business inventories.

"The economy got a temporary boost from the rebuilding of inventories, which logged the biggest increase since the third quarter of 2010.

Excluding inventories, the economy grew at a tepid 0.8 percent rate, a sharp step-down from the prior period's 3.2 percent pace and a sign of weak domestic demand. For all of last year, the economy grew just 1.7 percent, and economists expect only a bit of quickening this year. ... A sustained GDP growth pace of at least 3 percent would likely be needed to make noticeable headway in absorbing the unemployed and those who have given up the search for work."

Alan Krueger, chairman of the White House Council of Economic Advisers, in a statement regarding the disappointing fourth-quarter growth number that "faster growth is needed to replace the jobs lost in the recent downturn and to reduce long-term unemployment."

A $40 tax cut isn't going to make it happen.

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