Dick Armey writes in the WSJ:
It's clear why Keynes's popularity endures in Congress. Intellectual cover for a spending spree will always be appreciated there. But it's harder to see any justification for the perverse form of fiscal child abuse that heaps massive debts on future generations...
Of course, despite Mr. Obama's campaign promises to adhere to "Pay As You Go" budgeting, no one seems terribly worried about paying for what will likely be a trillion-dollar stimulus package. What everyone should agree on is that the money has to come from somewhere, either through higher taxes, borrowing or printing...
If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. If the government raises taxes to pay for the stimulus, it will, in effect, be robbing Peter to pay Paul. If the government prints the money, it will increase inflation, which will decrease the value of the dollar. That would, in effect, rob Paul to pay Paul back with devalued currency...
Taking money out of the private economy -- either through taxes or inflation -- and spending it in a way that doesn't offset the loss of money with real economic gains is worse than doing nothing...
There is no way around it; this stimulus bomb is going to create inflation like nobody's business and it will do little to move the economy forward.
7 comments:
Here, here. If only Americans and our government would HEAR HEAR.
Hi VH,
I think this is the clearest anyone has explained the negative effects of the passage of the stimulus package to non-economist like myself.
Tasha
Why did these sorts of questions never come up so much during Bush's big spending spree in the "war on terror" and search for WMD? Then it was justified and now it's not?
Or it's not patriotic to criticize Republican spending sprees, but it's already to take that language to Democratic spending? You look at the popular discourse during Bush and it's not about the ridiculous money being spent on war...
Sorry, that was my comment...
it seems to suggest that spending on war is always more important than spending on the economy...
and then there's the fact of PERSONAL overconsumption. No one was screaming about the cheap fact that the US economy has been 70% propped up by unnecessary individual trips to Walmart and McDonald's... and the car dealera, Best Buy, Tiffany's, etc. apparently that's ok too... spend beyond your means - that's always been the game here. Not just inherent to Obama.
ME,
Defense spending is justifiable as an action the Federal Govt undertakes as part of its Constitutional powers. We could argue over the amount, and I would perhaps agree that too much was spent and in the wrong place. But it's in a completely different category than welfare, pork, etc.
More worrisome is your assertion about "unnecessary individual trips to Walmart and McDonald's... and the car dealera, Best Buy, Tiffany's, etc."
Are you, or the government, to be the judge of what is or isn't necessary? I would argue that should be left to the individual purchasers and those businesses, since they have an inherent right to voluntary trade - even if the actions bankrupted them all.
On this second point, we have an irreconcilable difference. I believe in individual liberty; you do not, apparently, unless the outcome of the individual choices and the choices themselves are what you (or the government) think best.
That is, you believe (in principle, if not in degree) in dictatorship. If this overstates your position, I suggest you think about the implications of what you're saying.
And, by the way, those exact questions did come up during Bush's 'spending spree' in Iraq - repeatedly, by many across the political spectrum, for every day the war was occurring, especially when we were losing.
Pure capitalism is best, each man for himself financially, with the incentive to help the less fortunate ONLY coming through tax credits and rebates for donating to active charities.
Adam Smith, anyone?
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