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stimulus Archive

Saturday

25

June 2011

0

COMMENTS

We Don’t Need an Investor-in-Chief

Written by , Posted in Economics & the Economy, Taxes

How was anything ever invented before government started “investing” in new technologies? One wonders these things, given the seriousness with which Keynesians seem to believe that if they don’t choose the economic winners and then throw large sums of money at them – other people’s money, of course – then there will be no innovation or growth. The latest example of this faulty attitude involves a plan by the President to spend $500 million “investing” in manufacturing, or something:

President Obama on Friday will announce the launch of the Advanced Manufacturing Partnership (AMP), an initiative that would provide more than $500 million to encourage investments in promising technologies.

It is the administration’s second initiative in less than a month intended to boost U.S. manufacturing.

…“Today, I’m calling for all of us to come together — private-sector industry, universities and the government — to spark a renaissance in American manufacturing and help our manufacturers develop the cutting-edge tools they need to compete with anyone in the world,” Obama will say, according to prepared remarks.

What do Obama and his bureaucrats know about manufacturing or what “cutting-edge tools they need to compete with anyone in the world”? He doesn’t seem to know, for instance, that we’re already in a manufacturing “renaissance”, in so far as manufacturing output continues to grow to new heights, breaking its own record, year after year.

Perhaps an even better question is: what makes Obama qualified to spend other people’s money better than they would themselves? Government “investments” are necessarily made according to political criteria, as the first priority of a politician is to get reelected, not turn a profit. And in order for these vote-seeking politicians to spend money on their schemes, it must first be removed from the productive sector of the economy, where individuals with actual skin in the game are much better suited to find investment opportunities that will pay off.

If President Obama really wants to promote investment, he should remove the existing disincentives to savings and investment, such as the capital gains, dividends and death taxes, among other destructive taxes on capital formation. Simply put, we don’t need an Investor-in-Chief to direct investment capital to promising sectors and businesses, we simply need government to get out of the way and to stop making it so difficult for private investors to do so in the first place.

Friday

13

August 2010

0

COMMENTS

Thursday

12

August 2010

0

COMMENTS

Tuesday

6

July 2010

0

COMMENTS

Public Knows Better Than Congress

Written by , Posted in Economics & the Economy

The statists in Congress are enamored with Keynesian big government policies and profligate spending as a means of “stimulus.”  But while they travel the country to tout so-called “stimulus success,” the public displays a far better understanding of the underlying economics.  Not only does a plurality find that the stimulus bill actually hurt – rather than helped – the economy, according to a recent Rasmussen Reports survey, but an overwhelming majority of 69% to 15% said that cutting taxes is a better way to create jobs than government spending.

Monday

22

February 2010

0

COMMENTS

Memo To Obama: Economists Do Not Agree

Written by , Posted in Economics & the Economy, Taxes

President Obama likes to assert that economists across the political spectrum agree that big government spending is necessary to fight off recession.  “Economists on the left and right,” he insisted early in 2009, “agree that the last thing the government should do during a recession is cut back on spending.”  Essentially, he’s saying that all economists are Keynesians.  This is simply false, as Harvard Professor Jeffrey Miron tells us today at the Daily Caller.

..That brings us to the second argument for higher spending: the Keynesian claim that spending stimulates the economy. If this is accurate, it might seem the U.S. should continue its high-spending ways until the recession is over.

But the Keynesian argument for spending is also problematic. To begin with, the Keynesian view implies that any spending—whether for vital infrastructure or bridges to nowhere—is equally good at stimulating the economy. This might be true in the short term (emphasis on might), but it cannot be true over the long haul, and many “temporary” programs last for decades. So stimulus spending should be for good projects, not “digging ditches,” yet the number of good projects is small given how much is already being spent.

More broadly, the Keynesian model of the economy relies on strong assumptions, so we should not embrace it without empirical confirmation. In fact, economists find weak or contradictory evidence that higher government spending spurs the economy.

Substantial research, however, does find that tax cuts stimulate the economy and that fiscal adjustments—attempts to reduce deficits by raising taxes or lowering expenditure—work better when they focus on tax cuts. This does not fit the Keynesian view, but it makes perfect sense given that high taxes and ill-justified spending make the economy less productive…

Recently, Obama again cited the entire spectrum of economists as supporters of his agenda: “Now, if you hear some of the critics, they’ll say, well, the Recovery Act, I don’t know if that’s really worked, because we still have high unemployment. But what they fail to understand is that every economist, from the left and the right, has said, because of the Recovery Act, what we’ve started to see is at least a couple of  million jobs that have either been created or would have been lost.”

Economist Robert Barro explains in the Wall Street Journal what a load that is.

Saturday

5

December 2009

1

COMMENTS

Third Time Is Not The Charm On Stimulus

Written by , Posted in Economics & the Economy

The jobless rate is currently at 10% (or higher if you count the discouraged), so clearly we need a little government job promotion, right?  Barack Obama thinks so, and is set to unveil his latest “plan.”  But not so fast! Haven’t we done this before?

This will be the third time government has acted to “create jobs” since the beginning of 2008.  Why should we believe it will be any more successful now than it has been in the past?government-waste

In early 2008, President Bush teamed up with Nancy Pelosi to pass a $150 billion (then considered a lot of money) stimulus package.  This “booster shot” to the economy, consisting primarily of rebates to individual taxpayers, was supposed to head off recession.  At the time, the unemployment rate was under 5%.

A year later, Pelosi found herself with a new dancing partner in Barack Obama. President Obama’s subsequent stimulus package dwarfed that of President Bush.  Passed when the unemployment rate was not yet 8%, it was promised that the $800 billion stimulus would hold joblessness below a peak of 9%.  This package also failed, and today the unemployment rate is in double digits.

Leave it to government to insist we continue down a path with such a sterling record of failure.  It is time to abandon the Krugman-championed policies of Keynesian economics.  Government cannot create jobs by taking money out of the economy, funneling it through a wasteful bureaucracy, then directing it to the most politically connected and favored industries.  No economy has ever been successfully powered by such a model.

The best thing Democrats can do is to stop threatening to destroy so many industries via regulation and government control.  This would reduce the uncertainty hampering investment.  If they combined that by lowering the rates of the most destructive taxes, such as the corporate and capital gains taxes, an improved job market would follow.  Otherwise, we can continue banging our collective heads against the wall while insanely expecting an outcome other than pain.

Tuesday

17

November 2009

0

COMMENTS

Creating Fake Congressional Districts

Written by , Posted in Waste & Government Reform

I guess we know what the ‘create’ in “save or create” refers to:

Just how big is the stimulus package? Well for one, it has doubled the size of the House of Representatives, according to recovery.gov, which says that funds were distributed to 440 congressional districts that do not exist.

According to data retrieved from recovery.gov, nearly $6.4 billion was used to “create or save” just under 30,000 jobs in these phantom congressional districts–almost $225,000 per job. The web site operates on an $84 million budget and is tasked with monitoring the distribution of the $787 billion stimulus package passed by Congress–which, for the record, counts 435 members–in early 2009.

The site’s monitors, however, are not too savvy about America’s political or geographic landscape. More than $2 million was given to the 99th District of North Dakota, a state which has only one congressional district. In order to qualify for 99 districts, North Dakota would have to have a population of about 60 million people, almost 24 million more people than California.

More from Watchdog.org.

Update:  The Washington Examiner is tracking inflated numbers on the supposed impact of the stimulus, and finds that “more than ten percent of the jobs the Obama administration has claimed were ‘created or saved’ by the $787 billion stimulus package are doubtful or imaginary, according to reports compiled from eleven major newspapers and the Associated Press.”

Friday

8

May 2009

0

COMMENTS

Federal Government Bullies California On Behalf Of Unions

Written by , Posted in Labor Unions

The union investment in Barack Obama continues to pay dividends:

The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.

Schwarzenegger’s office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

This kind of federal government bullying against the states was entirely predictable, and is why many governors said “thanks, but no thanks” to federal dollars.  Gov. Schwarzenegger was not one of them.  In fact, he stabbed these principled conservatives in the back when he defended the porkulus and joked that if they didn’t want the money, he would take it for them.

Who’s laughing now, Arnold?

Thursday

19

March 2009

0

COMMENTS

Zimbabwe Comparison Was Appropriate

Written by , Posted in Economics & the Economy

When Mark Sanford compared Obama’s stimulus package to Zimbabwe’s banana republic, grievance-monger and House Majority Whip Jim Clyburn (D-victim) was up in arms, describing the comment as “beyond the pale.”  Why, he asked, did he pick Zimbabwe?

Now you know why, Mr. Clyburn:

The Federal Reserve yesterday escalated its massive campaign to stabilize the economy, saying it would flood the financial system with an additional $1.2 trillion.

The decision by the Fed to buy government bonds and mortgage-related securities is designed to lower borrowing costs for home mortgages and other types of loans, thereby stimulating economic activity. The central bank, effectively, will print more money to pay for the purchases.

Sound familiar?

Zimbabwe’s Leader Says He’ll Print More Cash

President Robert Mugabe has promised to print more money to fund municipal projects, a government newspaper reported Saturday. The pledge came despite hyperinflation that has created severe shortages of cornmeal, meat, milk and other staples.

So, how’s that working out for Zimbabwe?

Sunday

15

March 2009

0

COMMENTS

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About Me

profileI serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.

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