Archive | Stimulus to Nowhere
The irresponsible expansion of the budget to bail out state governments from their own budget deficits, expand Medicaid, boost education spending, food stamps and unemployment benefits, build federal buildings, provide more for public housing, construct climate change supercomputers, erect trade barriers overseas, create refundable tax credits, and make special interest payouts will not stimulate sustainable economic growth. Instead, the astronomical growth of government spending, coupled with further monetary easing and protectionism, will discourage investment, savings, and capital creation, because in the longer term it means higher taxes, higher interest rates, and inflation. It will destroy jobs in the private sector, thus increasing individual dependency on government. Importantly, it will steep American taxpayers ever deeper into a spiral of debt, now nearly $10.7 trillion. That includes $4.3 trillion owed in the form of unfunded obligations to Social Security, Medicare, and other commitments, and $6.4 trillion held privately, $3 trillion of which is held overseas. 40 percent of the debt held privately comes due this year. The only way for the government to pay it is to borrow yet more money.
As a result, the federal government is running the serious risk that it will default on its financial obligations, as the nation’s creditors during the current economic downturn may be unable to continue sustaining the uncontrolled growth of spending, leaving the nation in financial ruin.
America needs a plan now to begin paying down the national debt, not an ill-conceived scheme that will make that task impossible for our children and our children’s children. The nation needs to tighten its belt, and learn how to live on less credit, less borrowing, and less debt. This is a change that must occur at the individual level, at the county level, the state level, and the national level. It is not a change that should begin by doubling down on a hasty, careless gamble. Read more on the economic stimulus at CEI.org.
In light of the news about stimulus job creation statistics not being as advertised — complete with made-up Congressional districts — I offer another surprisingly relevant insight from Mises’ Human Action. Turns out there is a reason stimulus advocates are resorting to trickery:
“If government spending for public works is financed by taxing the citizens or borrowing from them, the citizens’ power to spend and invest is curtailed to the same extent as that of the public treasury expands. No additional jobs are…
Read the full story
This morning I read with interest - and amazement - the above headline. Does our president live in the same world that I inhabit? He’s worried about America’s increasing indebtedness and is pushing for a massive expansion of health entitlements (aka wealth redistribution programs) and the cap-and-tax global warming initiatives (aka wealth redistribution programs) and a host of other other wealth-destroying regulatory programs. Yet, he’s worried about America’s growing debt?
Our political system is only now perhaps emerging from a foolish…
Read the full story
by Michelle Minton
November 19, 2009 @ 4:58 pm
More cash/Fewer Clunkers
Via the Von Mises blog: According to the consumer pricing index report released by the Bureau of Labor Statistics report, the price of used cars rose 3.4% in October thanks to the government’s cash-for-clunkers that spirited away a large portion of the used-car inventory. So, for those of us who chose not to buy a new “greener” car last month, and who want to purchase a dirty old used car, we have a smaller pool from which to select.…
Read the full story
“[A] government can spend or invest only what it takes away from its citizens… its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.”
-Ludwig von Mises, Human Action, 4th ed., (Irvington-on-Hudson New York: Foundation for Economic Education, 1996 [1949], p. 744.
Read the full story
President Obama’s $800 billion stimulus package creates imaginary jobs, while destroying ones in the real world.
Billions from the stimulus are being spent on creating tens of thousands of imaginary jobs in 440 phantom Congressional districts, according to the government’s own web site:
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. . . . The web site…
Read the full story
ABC News broke the story this week of an executive administration that, ambitious to appear in control of the economy during this steep recession, reported patently false stimulus-related employment information. The Recovery Board, a task force created to track the $787 billion in federal stimulus spending, published on its website data for jobs “created or saved” in congressional districts that don’t even exist!
In one example, the stimulus tracking website reported that 30 jobs have been “created or saved” in Arizona’s…
Read the full story
UPDATE: It appears that I misinterpreted the cited data on home sales, though I elect to shift the blame to the poor labeling of the Census Bureau data set (linked in original text). The 33,000 per month I cited reflects only new home sales. The correct number for monthly home sales is well over 400,000 per month. However, one is left to wonder whether, in lack of the $8,000 first time home buyer tax credit, demand for home sales would…
Read the full story
by Elizabeth Jacobson
November 12, 2009 @ 4:08 pm
As part of the America Reinvestment and Recovery Act of 2009, congress has set aside $7.2 billion for Obama’s national broadband plan. It should come as no surprise that numerous municipalities and telecommunications companies have applied for a piece of the pie. In light of the continuing climb in the unemployment rate (which reached 10.2% in October), the Obama administration has decided to try to put the broadband stimulus money in the hands of developers ASAP, and has announced that…
Read the full story
Unemployment is now higher in the U.S. than in Europe, reports the Washington Post. “The official U.S. unemployment rate, reported last Friday, now stands at 10.2 percent,” compared to “9.7 percent” in Europe. This is the highest rate in more than 26 years, and marks a huge change from the recent past, in which unemployment was double the American rate in much of Europe, such as in France.
Unemployment is at 10 percent in France, which refused to adopt a U.S.-style stimulus…
Read the full story
by Fred Smith
November 09, 2009 @ 6:31 pm
The Washington Times, “Greedy Autoworkers,” editorializes the overwhelming rejection of the UAW’s proposed labor agreement. Unlike GM and Chrysler, Ford elected to reject the bailout money and benefited from the consumer distrust of our newly nationalized auto sector. Yet, Ford actually went into the black this past quarter. GM and Chrysler, operating as GSEs, are safe from strikes because the government takeover agreement forbids the UAW to strike. Big Government is willing to discipline Big Labor. In the market, odds shift and…
Read the full story
by Fred Smith
November 09, 2009 @ 6:02 pm
“The Man Who Predicted the Depression,” in Saturday’s WSJ explains von Mises’s interpretation of the business cycle. To Mises, volatility was inevitable with a politically controlled money supply - given to over and under supply of money. The Federal Reserve and central banks generally are political-indeed, the most powerful Government Sponsored Enterprises. When they ease credit via transactions with designated banks, banks in their ambit also view themselves as wealthier, spending and investing accordingly. When credit is tightened, the reverse occurs. …
Read the full story
by Fred Smith
November 09, 2009 @ 5:58 pm
Warren Buffet, one of the most respected investors in America, recently purchased Burlington Northern, one of the nation’s largest railroads with some 32,000 miles of track. BN like almost all railroads carries coal - lots of it from the Powder River Basin in Wyoming to the nation’s electrical power plants. But President Obama and his Green allies are trying to end the use of coal in America. If they succeed, the rail sector will collapse.
Buffet, according to the Wall Street…
Read the full story
It’s been a year since the president was elected, and he’s already piled up an impressive list of lies and broken promises.
The broken promises include his pledge to enact a “net spending cut,” his promise not to raise taxes on anyone making less than $250,000 a year, and his promise not to sign bills without first giving the public five days of notice.
The Congressional Budget Office says that Obama’s proposed budgets will explode the national debt through massive spending increases, increasing the already large deficits…
Read the full story
The recent announcement that the GDP grew in the third quarter at an annualized rate of 3.5 percent was referred to by Treasury Secretary Tim Geithner as proof that the economy is finally improving. But a quick glance at history demonstrates that this is not the case.
Between 1934 and 1937—during the heart of the Great Depression—GDP grew at by an average of 9.5 percent annually. In 1934, GDP grew by nearly 11 percent, but it would be six more years…
Read the full story
by Marc Scribner
October 30, 2009 @ 1:42 pm
I’ll admit it: William Greider is an easy target. The former Rolling Stone reporter and current national affairs correspondent at The Nation has a habit of making a fool out of himself, to the delight of the right and to the chagrin of the brighter segments of the left. Left-wing economist Paul Krugman, reviewing his 1997 anti-globalization book One World, Ready or Not, said that “the main lesson one really learns from [Greider's book] is how easy it is for an intelligent,…
Read the full story
Question: What do you get when you combine a $700 billion “stimulus” package, $1.1 trillion in wealth-destroying regulatory compliance costs, a mountainous non-discretionary entitlement obligation, bailouts for large manufacturers, an small army of unelected czars, and a $1.4 federal budget deficit?
Answer: Way too much government!
In a new CEI paper, One Nation, Ungovernable?, Clyde Wayne Crews lays out an agenda for setting America on the path to economic recovery. From lifting burdensome regulations and restrictions on executive compensation to fostering competition and…
Read the full story
Popular outrage over eminent domain abuse may have waned a bit since the Supreme Court’s poorly-reasoned Kelo ruling in 2005, but economic development takings remain incredibly unpopular throughout the country. Public opinion polls indicate that more than 80 percent of Americans oppose eminent domain for economic development, which is surprising when one considers the relative inaction on the part of state legislatures to meaningfully protect their citizens’ property rights.
However, there are reasons to be optimistic. Brooklynites fighting the proposed Atlantic Yards development…
Read the full story
Detractors of capitalism decry that it caters to special interests. The opposite is actually true. Just look at what’s happened in the last year.
Most of Wall Street came to government asking for a bailout when the government-created housing bubble popped.
The Big Three automakers also went to Washington for largesse when their customers came to prefer Toyotas and Hondas.
Health insurance companies stand to make a killing if Obamacare passes.
T. Boone Pickens and Al Gore would make millions from environmental legislation.
Ludwig von…
Read the full story
Unemployment has risen to 9.8 percent, a 26-year high.
That’s much higher than the Obama administration predicted unemployment would rise, if Congress had refused to pass his $800 billion stimulus package. The administration claimed unemployment would rise to 8 percent without a stimulus.
Small businesses are finding it more difficult than ever to borrow badly needed money to meet their payrolls. New financial regulations backed by the administration are contributing to a terrible credit crunch. Meanwhile, the wealthy Wall Street investment bank Goldman Sachs, perhaps the…
Read the full story
“Stimulus” packages that increase government spending don’t work, notes Harvard economist Robert J. Barro in the Wall Street Journal.
The administration claimed that Obama’s $800 billion stimulus package would deliver a short-run “jolt” that would quickly lift the economy, but unemployment rose rapidly after its passage, and the package has actually destroyed thousands of jobs in America’s export sector.
Countries that refused to adopt big stimulus packages have fared better than those that imitated Obama. And the biggest-spending countries have suffered worse in the recession.
Obama claimed his…
Read the full story
Loading ...