This week’s Congressional Budget Office (CBO) report is the latest addition to a voluminous body of evidence that government spending is a poor way to jump-start the economy. That’s bad news for the $825 billion economic stimulus package that President Barack Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi insists is desperately needed right now. But, CBO found that only $136 billion – less than half of the $355 billion House leaders plan to allocate to infrastructure and other discretionary programs – would even be spent by 2010. This raises obvious questions about the wisdom of a multi-billion dollar “stimulus” package that will provide precious little stimulus – except for Washington lobbyists and bureaucrats – until well after the current recession has become history.
Even without the record-setting stimulus package, the CBO says the federal deficit for the current fiscal year will hit an unprecedented $1.2 trillion – a truly staggering sum all by itself. But it gets worse. The Heritage Foundation calculates that passing the stimulus bill will increase the national debt to $14 trillion, or 95 percent of the nation’s entire annual GDP, in FY2010. With this kind of debt load, Uncle Sam couldn’t quality for one of those sub-prime mortgages the feds have been forcing banks to give unqualified home buyers for decades.
Since the first “stimulus” package signed last year by former President George W. Bush obviously didn’t work (if it did, we wouldn’t need another one), putting American taxpayers even more in hock seems like a very bad idea. The stock market agrees, judging by the worst-ever Inauguration Day dive in its 124-year history. Where will the $825 billion come from? Since government produces no wealth, there are only three options: Take it out of the already floundering economy by raising taxes; inflate the currency (which is just an indirect tax); or borrow it and pump up the national debt. All three alternatives bode ill for American prosperity.
In the 1990s, Japan found out the hard way about the failure of massive infrastructure spending intended by government to stimulate its then-stagnant economy. Despite spending billions of yen, the effort failed to end a 10-year recession now referred to as Japan’s “lost decade.” The only stimulus that’s actually been proven to work relatively quickly is tax cuts. But the $275 billion in tax cuts Obama proposes to lure reluctant Republicans into voting for his huge spending bill accounts for just a third of the total. There’s still $550 billion in new spending Obama plans to impose on an already weakened economy. Talk about throwing good money after bad.
