Greg Anrig at Talking Points Memo puts the smack down on Justin Fox's stupid critique of Obama's economic plans in TIME magazine. Fox:

These add up to what you could call the stock Democratic response to tough times. They're not necessarily bad ideas, but they're not what you could call new or transformative either. Obama throws in a few populist panders — he favors a windfall profits tax on oil companies (which could discourage investment in new energy resources), and says he would oppose raising the Social Security retirement age (which if phased in over a long enough period would be the fairest, most sensible way to ease some of the system's long-run funding challenges). Near the end of the speech, there was a hint of Obama's "yes, we can" vision: a plan to give $4,000 a year in tuition aid to college students who pledge themselves to community or national service after graduation.

Anrig schools Fox pretty thoroughly:

As for the windfall profits tax, what evidence would Fox cite beyond oil industry press releases that investment in new energy sources would decline?

Also, does Time's Justin Fox know that the retirement age for Social Security is already scheduled to increase to 67 by 2022? Most wonks are actually much more supportive of Obama's idea of raising the ceiling on Social Security payroll taxes than increasing the retirement age even further.

The "stock Democratic response to tough times" that Fox writes about is better labeled "how the federal government has effectively responded to recession in the past."

Check the short term fixes that Obama is pitching in his two week long economic push:

For now, he and his advisers are reciting the details of his three big short-term priorities: a new $50 billion stimulus program, much of it routed into extending unemployment insurance beyond the current 26-week limit and helping struggling state governments; a more aggressive foreclosure-prevention effort, with $10 billion in funding; and a tax cut for Americans making less than $150,000 a year — to be financed with tax increases on those making more than $150,000 a year.

New and innovative can be good but if it ain't broke, don't fix it.

As I wrote last week,a similar extension of unemployment insurance benefits worked well in 2002. The general consensus about the action was that it helped but wasn't enough. As The Drum Major Institute wrote back in the day:

$23.5 million in consumer cash would flow every week to the Pathmark in East Harlem, the bodega in Mott Haven, the laundry in Corona, and the hardware store in Sunset Park.

Applying the multiplier effect, the federal government found in its study of the extended benefits program of the early 1990's found that every $1 in unemployment benefits generated $2.15 in stimulus. Over the course of the first round of the extension (13 weeks), $306.6 million would flow into the hands of consumers in communities in New York City

Obama's plans aren't rocket science, but they do follow a proven blueprint -- much like Clinton's budgets of the 1990s. Fighting recessions are a lot like losing weight, the formula is well known: eat less and exercise.

With recessions, it's equally simple, put more money in the hands of people who need it and will spend it on essentials.

That's what needs to be done and what Obama's proposing to do.

There's more...

The plight of states being forced to slash away at their budgets has been well chronicled this year, but on Sunday Louis Uchitelle wrote a piece in the New York Times about the broader implications of state cutbacks on spending. After highlighting the many crises caused by the economic failures of the Bush administration including a housing bust, credit crunch, shrinking level of consumption, rising unemployment and faltering business investment, they discuss one prop that's holding up our failing economy:

State and city governments have yet to shrink the economy; indeed, they have even managed to prop it up. They have quietly maintained their spending at pre-crisis levels even as they warn of numerous cutbacks forced on them by declining tax revenues. The cutbacks, however, are written into budgets for a fiscal year that begins on July 1, a month away. In the meantime the states and cities, often drawing on rainy-day savings, have carried their share of the load for the national economy.

There's more...