The spending just keeps piling up. As Gus Van Horn puts it,
The Troubled Asset Relief Program, is, at $700 billion, the largest such outlay in history by the Federal government, but it is hardly the full dollar cost of the current financial crisis. Also passed in 2008 were the $30 billion Bear Stearns, the $150 billion American International Group, and the $200 billion Fannie Mae/Freddie Mac bailouts. This is nearly $1 trillion in bailouts for 2008 alone. In addition, the Federal Reserve may have already lent (as of last Friday) another $2 trillion on an emergency basis to prop up the economy, over half of that in the seven weeks following a relaxation of collateral standards on September 14.
And, by now, we should all know that “loan” is all but a government code-word for “present-day wealth transfer to the unproductive, to be paid for by future productivity on the part of other members of society”. Via Matt Drudge, there is news this morning that the Democrats are mulling an additional $700 billion “stimulus” package and the Fed “pledges” — our words are becoming as inflated as our currency eventually will be — have topped $7.4 trillion!
Obama is also talking about a new jobs program like FDR’s WPA:
President-elect Barack Obama is developing a plan to create or preserve 2.5 million jobs over the next two years by spending billions of dollars to rebuild roads and bridges, modernize public schools, and construct wind farms and other alternative sources of energy.
The campaign did not release an estimate of the number of jobs that his latest proposal would create. But congressional aides who have been involved in developing stimulus proposals said that any plan to create 2.5 million jobs is likely to be significantly larger — probably well over $200 billion, or between 1 and 2 percent of the gross domestic product.
Economists have called on the federal government to spend at least $150 billion and as much as $500 billion to ease the effects of what is expected to be the most painful and prolonged recession since World War II. A stimulus package signed by President Bush in February cost $168 billion.
House Democrats have been talking about a new package worth at least $150 billion, and possibly much more. During the presidential campaign, Obama proposed a two-year, $175 billion stimulus package with money for cash-strapped state governments and infrastructure projects as well as a $1,000 tax credit for working families.
This is done to “stimulate” the economy. Keynesians believe that if the state takes money from Peter to give to Paul that this somehow improves the economy.
Obama also wants “to make health insurance affordable and accessible to all.” (This used to be called socialized medicine, but sophisticates these days consider any talk these days about socialism as unrefined. Obama might be following the ten point program laid out in the Communist Manifesto, but please — don’t call him a socialist!) From Obama’s own web site,
The Obama-Biden plan provides affordable, accessible health care for all Americans, builds on the existing healthcare system, and uses existing providers, doctors and plans to implement the plan.
How much will this cost? However much the government estimates, you can bet the house, if you still have one, that the real cost will be a lot more.
Then there are Obama’s plans for sweeping new “service” progams.
President-Elect Obama will expand national service programs like AmeriCorps and Peace Corps and will create a new Classroom Corps to help teachers in underserved schools, as well as a new Health Corps, Clean Energy Corps, and Veterans Corps.
How much will this end up costing?
Earlier this year it was estimated that Obama was proposing $1 trillion in new spending. That was before the crisis and the hundred of billions — trillions now — of money being thrown at corporations the state considers too big to fail.
In addition to spending there are threats of massive regulations such as cap and trade that could devastate the economy. To top it all, there is talk in Congress of nationalizing 401k plans. Politicians are desperate to get their hands on that pool of wealth. After all, shouldn’t everyone sacrifice for the good of the country?
Benjamin M. Anderson, who was an economist working on Wall Street back in the 1920’s, proved in Economics and the Public Welfare that the economy was recovering when Roosevelt was elected president in 1932. Then Roosevelt’s first 100 days sent the economy into the Great Depression, which lasted until 1945, when the Republican Congress repealed some of Roosevelt’s most oppressive measures, such as wage and price controls. It looks like we are on the verge of another massive wave of government intervention, all in the name of ending a crisis.
Do our present politicians think all this spending and regulating will make anything better? Do they think Americans will prosper and be happy for all of it?
Statists don’t care if Obama’s program is practical, so long as it is, by their standards, moral. Altruism demands that the state redistribute wealth and reorder society to make it more “fair.” Obama’s web site says,
“Obama will ask the wealthiest 2% of families to give back a portion of the tax cuts they have received over the past eight years to ensure we are restoring fairness and returning to fiscal responsibility.”
Obama considers taking from the rich to give to the less rich to be “restoring fairness.”
Obama’s program will not create wealth. It will only expand the power of the state in order to force the productive to serve the less productive. It will make statists happier because they are reforming American society in accordance to their morality. That is the real meaning of change. Millions of naive voters thought it meant making lives better.
Another thing people forget: environmentalists oppose prosperity. The idea of free people in a capitalist society improving their standard of living, driving bigger cars and exploiting more resources is their nightmare. In their ideal society, people would live in villages in a pre-capitalist economy, with food grown locally, and the local cobbler happily repairing Timmy’s shoes in his dusty little shop. Billions would die if we reverted back to such an economy. C’est la vie.
Obama’s spending and intervention will make America less prosperous. It will not work. A great deal of wealth that would have existed if the government did nothing will be destroyed. Maybe that’s the point.