It’s been a truism among liberals and socialists for decades that increased government spending on huge public works projects — aka “investments in infrastructure” — is the best way to stimulate economic growth. In fact, the record since Herbert Hoover’s proto-New Deal programs provides abundant proof that the only growth such spending encourages is government bureaucracy, regulation and dependency.
Don’t tell that to the incoming Obama administration, which is preparing, in the president-elect’s words, a proposal to “put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children and building wind farms and solar panels, as well as producing fuel efficient cars.” New York’s Sen. Charles Schumer predicts the package could cost as much as $700 billion.
But if increased government spending of any kind would create permanent, productive nonpublic-sector employment, surely the record of the last eight years — when federal outlays skyrocketed in areas like transportation and education — would bear evidence of the fact. Obama’s statement provides yet another illustration of how those who compulsively turn to government to solve every problem are frequently addressing problems created by government.
Consider that the deplorable condition of many roads and bridges in America today is in part a byproduct of the federal government’s long obsession with spending on mass transit, even to the extent of diverting highway trust funds from road maintenance. Never mind that mass transit accounts for only a tenth of all trips made by Americans. And the reason public schools are “failing our children” isn’t because of poor physical facilities, but rather the immovable obstacles to classroom reforms placed by teachers unions, which enjoy a government-enforced instructional monopoly. Shiny new school buildings don’t teach kids to read; properly motivated, compensated and accountable — i.e., non-monopoly — teachers do.
A better way to stimulate economic growth and create new jobs is to empower middle-class Americans by letting them keep more of their money, as proposed by former House Speaker Newt Gingrich and Peter Ferrara of the Institute for Policy Innovation. Writing last week in The Wall Street Journal, they proposed slashing the “25 percent rate that now applies to single workers earning $32,550 to $78,850, and married couples earning $65,100 to $131,450. We should reduce that rate down to the 15 percent rate paid by workers below these income levels. That would, in effect, establish a flat-rate tax of 15 percent for close to 90 percent of American workers.” Gingrich-Ferrara would be an actual tax rate reduction instead of Obama’s fake cut “for 95 percent of Americans” that is mostly cover for transferring wealth from taxpayers to tax consumers.
