Time to try growth to solve economic woes

Daniel Henninger:

With the November election just around the corner, President Obama spent the past two days hanging in middle-class folks' backyards in Albuquerque, Des Moines and Richmond to discuss the state of the economy. But it could be the American people are pretty well talked out on the economy. Rather than talk, it looks as if they are about to repudiate a formerly popular president who has disappointed them, throw over a Democratic Party they think has failed them, and hand power to a Republican Party they don't trust.

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We have an unemployment rate that is beginning to look stickily stuck above 9%. GDP growth, the official measure of economic life, keeps falling (down to 1.6% in the second quarter). The stock index blips up and down daily.

Solution No. 1 was to throw nearly $1 trillion of stimulus at the economy. But Keynes failed. Then they sprayed the economy with gallons of Chairman Ben's Quantitative Elixir, or QE. Nothing happened. They could have extended the Bush tax cuts, but instead the Pelosi Democrats punted the subject past the November election, the equivalent of kicking the ball straight up in the air.

It looks to me as if there's only one policy they haven't tried: economic growth.

Economists dispute among themselves about a lot, but not about the proven wonders of strong economic growth. It creates jobs, increases individual wealth, reduces debt, and enhances national well-being. Strong, as opposed to the middling, economic growth the U.S. has now, is so vital that a great nation should want to do whatever it takes to get it.

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The problem is the Democrats thought that their stimulus would create growth. It failed spectacularly and they are reaping a political whirlwind that is also powered by their health care fiasco. The Democrats have tinkered with some other things like regulatory "reform" to no avail. They have ignored the root cause of the financial downturn which was their ill advised housing policies which required loans to people who could not afford them.By throwing a couple of trillion dollars at the wrong thing there is not much left to use to push growth through tax cuts, which could have been their plan all along.