The New Clarion

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Overstimulated

By Bill Brown · January 5th, 2009 6:04 am · 3 Comments ·

Barack Obama’s latest radio address, wherein he announced the American Recovery and Reinvestment Plan, deserves a thorough fisking because of its importance as well as its pregnancy:

As the holiday season comes to end, we are thankful for family and friends and all the blessings that make life worth living. But as we mark the beginning of a new year, we also know that America faces great and growing challenges—challenges that threaten our nation’s economy and our dreams for the future. Nearly two million Americans have lost their jobs this past year—and millions more are working harder in jobs that pay less and come with fewer benefits. For too many families, this new year brings new unease and uncertainty as bills pile up, debts continue to mount and parents worry that their children won’t have the same opportunities they had.

These challenges of which he speaks—the ones that “threaten our nation’s economy and our dreams for the future”—come from this promising of everything to everyone and his willingness to plunder the economy toward his own ends. This new year will, in fact, bring “new unease” and our children will not have the same opportunities we have since they will be saddled with unprecedented levels of deficit spending and government intervention all in the name of “doing something.”

However we got here, the problems we face today are not Democratic problems or Republican problems. The dreams of putting a child through college, or staying in your home, or retiring with dignity and security know no boundaries of party or ideology.

The problems are Democratic problems and they are Republican problems. The incredible expansion of government power and interference was caused by these two power-lusting parties. These parties know no boundaries or limitations on government.

These are America’s problems, and we must come together as Americans to meet them with the urgency this moment demands. Economists from across the political spectrum agree that if we don’t act swiftly and boldly, we could see a much deeper economic downturn that could lead to double digit unemployment and the American Dream slipping further and further out of reach.

If there’s one thing I fear about government, it’s “swift” and “bold” action. I don’t care if every economist out there advocated an $8 trillion stimulus; there is an inherent problem in government spending and it doesn’t matter whether it’s Obama, FDR, or Ronald Reagan deciding on the outlays. Governments do not make the wealth they spend—they take the money from some and give it to others. (Inflation—i.e., the printing of money—is really shifting the taking of money from present taxpayers to individuals in the future.) So the net effect on the economy is neutral at best and most likely negative since the government spends the money for political reasons.

Furthermore, “double digit unemployment” is really an allusion to the Great Depression, when unemployment reached 25% of all workers. Considerable controversy has erupted recently as to whether Franklin Roosevelt’s New Deal prolonged and aggravated the Great Depression. Those on the left rightly see that such a question has considerable implication for the present, so they vigorously object and cast aspersions on those who believe differently as “abject insanity.”

While the pedigree of those trying to shut down debate on this issue is impressive, the facts are not on their side. Two UCLA economists persuasively argue that FDR’s policies tacked on an additional seven years to the 15-year depression mostly due to his cartelization of industry coupled with pro-union labor policies. This made it unprofitable for businesses to hire people since they were forced to pay above-average wages by law, so unemployment remained high a decade into it.

Beyond the actual policies of FDR, his tinkering and an emphasis on the planned economy exacerbated the Great Depression by causing private investment to recoil. The businessman’s inability to make decisions about the future of his business was paralyzing—the consequences of which are impossible to estimate. Business needs freedom and certainty, and both were in short supply during the New Deal.

That’s why we need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term. And this plan must be designed in a new way—we can’t just fall into the old Washington habit of throwing money at the problem. We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.

Strategic investments that the private sector is not willing to make, like these valuable infrastructure projects and whatever other pork Congress might see fit to incorporate in a stimulus package that should be at least $775 billion. His plan will create 2.4 million private sector jobs? How does the government “create” jobs in the private sector? Oh, through a tax credit. Does he really think businesses are that stupid? This credit insures that employers will hire today, get the credit, and then fire the make-workers next year.

To put people back to work today and reduce our dependence on foreign oil tomorrow, we will double renewable energy production and renovate public buildings to make them more energy efficient. To build a 21st century economy, we must engage contractors across the nation to create jobs rebuilding our crumbling roads, bridges, and schools. To save not only jobs, but money and lives, we will update and computerize our health care system to cut red tape, prevent medical mistakes, and help reduce health care costs by billions of dollars each year. To make America, and our children, a success in this new global economy, we will build 21st century classrooms, labs, and libraries. And to put more money into the pockets of hardworking families, we will provide direct tax relief to 95 percent of American workers.

This dependence on foreign oil business really irks me. First, almost as much oil is imported from Canada and Mexico as comes from OPEC countries. Second, replacing the OPEC oil is not feasible whether by conservation, ethanol, or fuel-efficient cars. Third, any reductions in our importation will be more than offset by increases in China, India, and other growing consumers of gasoline. Finally, the United States is interdependent with the rest of the globe for many other raw materials so there is no reason to single out oil. For these and many other reasons, I cannot recommend Robert Bryce’s Gusher of Lies enough. He brings considerable research and insight to bear on this subject and thoroughly trashes the conventional wisdom.

Since the government has not been putting enough money into the highways, health care, and education, it’s time to spend, spend, spend. But not in the “Washington habit of throwing money at the problem” way because the money they’re throwing around this time is coming straight out of the 5% of Americans who don’t need any relief from crushing tax burdens. If they could create some jobs while they’re at it, that’d be great also.

I look forward to meeting next week in Washington with leaders from both parties to discuss this plan. I am optimistic that if we come together to seek solutions that advance not the interests of any party, or the agenda of any one group, but the aspirations of all Americans, then we will meet the challenges of our time just as previous generations have met the challenges of theirs.

“I’ve got to get the Washington leaders to realize that this package advances the interests of all Americans residing in Congress and the White House.”

There is no reason we can’t do this. We are a people of boundless industry and ingenuity. We are innovators and entrepreneurs and have the most dedicated and productive workers in the world. And we have always triumphed in moments of trial by drawing on that great American spirit—that perseverance, determination and unyielding commitment to opportunity on which our nation was founded. And in this new year, let us resolve to do so once again. Thank you.

“Yes, we can have your cake and eat you too! Just keep producing the wealth for us to take and spread around, please.”

Our nation was founded on liberty, not the statism of Barack Obama. His exhortations to the contrary will not change that. We have triumphed in moments of trial in the past because we were not yoked to a ship of state that has reached ocean-liner proportions. The sensible thing to do in the face of this government-created crisis is to let the bust runs its course and stop this from turning into a full-blown depression due to meddling.

3 responses so far ↓

  • 1 Chuck // Jan 5, 2009 at 6:31 pm

    “To save not only jobs, but money and lives, we will update and computerize our health care system to cut red tape, prevent medical mistakes, and help reduce health care costs by billions of dollars each year. ”

    Really? He wants to cut red tape? Let me whisper a secret in your ear, Mr. Obama. The way to cut red tape is to get the government out of the economy, not further into it.

  • 2 L-C // Jan 6, 2009 at 5:33 am

    He meant to say blue tape, the ribbon of silk armor protecting our remaining rights.

  • 3 Bill Brown // Jan 6, 2009 at 11:11 am

    Russ Roberts makes an excellent point that these “tax cuts” aren’t really tax cuts because there’s no accompanying spending cut. It’s just shifting the burden from taxpayers today to taxpayers tomorrow.

    And Willem Buiter notes that there’s an implicit (and incorrect) assumption that government borrowing can continue apace forever. If the federal government isn’t taxing and can’t borrow, then it has to run the printing presses.