Posted by
Philip Mella on Wednesday, July 15, 2009 2:54:06 PM
The most sweeping and caustic criticism of the Democrat Congress is its fundamentally skewed understanding of economic principles. It begins with its thoroughly ignorant assumption that government spending is or can be tantamount to an economic stimulus. That's an arrogant and misguided notion, and it's routinely advanced by champions of government intervention who inhabit an alternate universe where the laws of economics were written by Marx.
Writing in Politico, Harold Ford, chairman of the Democratic Leadership Council, confirms this by talking about a 'smart stimulus,' which is his panacea for our sputtering economy. He makes the brashly thoughtless assertion that
"To be effective, a stimulus must be designed to have an immediate impact in creating jobs and helping states weather the current economic crisis. At the same time, it cannot add to our long-term debt."
It's the height of irony that he notes earlier in his piece that the first 'stimulus' package "is still being disbursed." A more candid characterization would be that it's just starting to be disbursed. Indeed, if the definition of an effective stimulus is timeliness then why has only a small percent of the first $787 billion been disbursed to date? But, more critically, why do the likes of Ford believe that government spending will impact "jobs"? Where's the evidence?
It's laughable that he stipulates that the financial assistance can't add to our long-term debt. Does he sincerely believe his liberal pals in Congress will reduce spending in other areas to compensate for the cost of a second stimulus? He talks about providing aid to states through loans. What if a state defaults on the loan? And, he finishes his exercise in facile reasoning by arguing that "Through an emphasis on innovation and investment in new energy industries, President Barack Obama has begun to lay the groundwork for a U.S. economy that bolsters its position as the driving force of economic growth worldwide."
Really? So, deficit spending in "energy industries" will lead to economic success? Where is the evidence that government investment in energy will lead to economic recovery? The single most productive investment government could make is to streamline the regulatory apparatus that's strangling the private energy sector so that nuclear power plants could be brought on line. But that would make economic sense, so it won't happen.
With respect to resuscitating our economy, the liberals might look at the simplest solution that's obvious to all but the politically blind: reduce the cost of doing business. Cut the corporate tax rate from 35 percent (the second highest in the world) to 25 percent, eliminate capital gains taxes, and reduce marginal rates across the board. But that wouldn't purchase the political power they so desperately crave, so it they would never support it.
However, that doesn't mean Republicans can't champion those ideas, and it would be a sign that the Party wasn't at death's door if leaders nationwide would make impassioned arguments for a real economic stimulus in the form of reducing our onerous tax and regulatory burdens. It would demonstrate that government can be an ally to business, rather than an impediment, and it would reduce unemployment, which would increase consumer spending, which is 70 percent of the economy.
It makes perfect sense, so unless Republicans win control of Congress next year, you can be sure it's not going to happen.