Monday, December 15, 2008

Obama's Not Worried About Deficit Spending....He Should Be!

The one thing that I cannot understand at all is how any politician can believe the way our of a recession is to spend more of the O-U-R hard-earned money. "Incentive?" IF you are taking more money from me; or, you are taxing the holy heck out of my kids/grandkids, how can you possibly be making things better?

John Stossel follows that theme: "Krugman echoes John Maynard Keynes' complaint: Roosevelt's budget deficits were too small. Indeed, the deficits run by Roosevelt were comparable to those run by his predecessor, the allegedly do-nothing, laissez-faire Herbert Hoover. Both administrations spent heavily, but both also raised taxes substantially.

Of course, neither was able to fix the economy. On the contrary, their policies made a depression the Great Depression, extending it many years and even generating a depression within a depression in 1937.

But Krugman and others suggest that since the New Deal ran moderate deficits and the Depression persisted, then Roosevelt should have run bigger multiyear deficits -- and so should Obama.

This is the wrong lesson to learn from the 1930s. The New Deal didn't fail because its deficits were too small. As Amity Shlaes shows in her book "The Forgotten Man," the New Deal failed because it interfered with the market's natural regenerative processes. By raising taxes, hamstringing producers with arbitrary regulations and creating uncertainly about what the government would do next, business people were unwilling to invest and hire workers.

Uncertainty about taxes, regulation and government policy similarly threaten recovery today.

Obama must realize that government has no wealth of its own and that commandeering scarce resources from the private sector only stifles the economy. The 2009 deficit is projected to be $438 billion. Obama's "stimulus" could take it up to a trillion and beyond. That's just the beginning since the Democratic Congress' spending wish list and Medicare's $35 trillion unfunded liability loom.

We should all worry about the deficit."

Stossel has more to say IN his complete piece!