After two failed attempts at fiscal “stimulus” since the start of the recession (Bush in 2008 and Obama in 2009), the president wants to try more of the same with his $447 billion “jobs” bill. Is the third time the charm? I think not. And that’s before even counting the job-killing tax increases he proposed to pay for it.
President Obama’s persistence in pursuing Keynesian policy rests on the false assumption that government spending is not only as efficient as private spending, but also results in outcomes that are just as sustainable. One needs look no further than the recent bankruptcy of the stimulus’s green energy poster-child, Solyndra, to see just how absurd that assumption is. Yet, Obama and his ilk seem hell-bent on spending more money they don’t have — well, that is unless they can squeeze it out of America’s most successful and industrious through tax hikes.
At its core, the notion that government spending can foster economic growth falls prey to Frederic Bastiat’s principle of “seen and unseen,” in which he explains that advocates of arbitrary spending (I dare anyone to call by any other moniker the $64 million project packed into the ’08 stimulus to connect 136 rural Montana residents to broadband Internet) fail to take into account how those same dollars could have been used more productively. In doing so, they focus only on the seen (cosmetic short-term jobs being immediately created) and fail to realize what could have resulted had they not intervened.
Following Solyndra’s demise and Obama’s desire to repeat the same mistakes, Rep. Ron Paul adeptly contextualized Bastiat’s words to our current situation:
Yes, you could have gone to the Solyndra factory and you would have seen jobs. What you could not have seen were the productive jobs that were never created. Real venture capitalists make decisions based not on politics and photo opportunities, but on complex economic estimations of risk and reward. They don’t simply throw piles of other people’s money at a factory and expect magic to happen. The uncreated jobs you can’t see might still be around. Instead, we have more government debt which will lead to more inflation and more taxes. These, in addition to an already hostile regulatory environment, only add to the burden and risk of job creation in the private economy.
It has been said that when all you have is a hammer, everything is a nail. Our government is full of people who sincerely believe big government and more spending is the answer to every problem. They automatically look to government for every solution. Government is their hammer, and all they know to do is to keep hammering. When government “solutions” still don’t solve the problems, they are unfazed. They keep calling for more government, more laws, and more programs. Americans are tired of being treated like nails.
Pardon the obvious play on words, but Paul hits the nail on the head. A September 2011 Gallup poll shows that Americans now believe that the federal government wastes 51 cents out of every dollar it spends! That’s a record high since Gallup began polling for this question in 1979. But despite a dubious public, Keynesians within the administration continue to play with their flawed models that equate public spending with its private counterpart.
On top of all this, the president proposes tax increases on America’s job creators in order to finance his spending binge. Wait…I thought this was a “job creation” plan? Even Keynes didn’t believe in that tax-and-spend logic. Don’t let the big white house and the bodyguards fool you, Barack Obama has officially left the oval office until November 2012. President Obama is now candidate Obama.
David Brooks, a rather centrist New York Times columnist, calls the president’s plan, “a campaign marker, not a jobs bill.” Why? Because it espouses the oft-raised falsity that the rich do not pay their “fair share” in taxes. In fact, the tax code is so progressive that the top 1 percent of income earners paid more in federal income tax than the bottom 95 percent in 2007, according to the Tax Foundation.
In calling for higher taxes on businesses and wealthy Americans on Monday, the president struck a strong populist tone to reconnect with his base. It’s no surprise that liberal Democrats in his base have become increasingly disappointed with his growing centrism since the 2010 election. Specifically, the president’s approval rating among Democrats fell 11 percent from 81 percent to 70 percent from June to August 2011, according to an August CNN/ORC poll. Therefore, it’s also not very surprising that he would use one of the most powerful and easy-to-use tools to energize them: class warfare.
Expect more demands for government profligacy and more demonization of industrious Americans for the next fourteen months — the executive branch will be on a partisan bent until the next election.
But there may yet be hope in unseating the “anointed one.” In defending his “tax the rich!” rhetoric, Obama claimed, “This is not class warfare. It’s math.” The remnants from the “birthers” movement may find new momentum in seeking proof of his high school diploma!