WHY MORE "STIMULUS" WON'T WORK
10/1/2011
President Obama’s plan to spend another $450 billion to create jobs will fail just as predictably as all the other so-called "stimulus" plans that he has enacted.
Despite failed spending programs that have cost taxpayers over $1 trillion since 2009, Obama is pushing a plan to put the country even deeper into debt and make unemployment even worse. The burden of increased spending must always fall upon the taxpayer in the form of higher taxes, higher inflation, and higher interest rates, all of which further hinders job growth.
The First "Stimulus"
The American Recovery and Reinvestment Act of 2009 cost taxpayers $862 billion to create "shovel-ready" jobs and keep the unemployment rate below eight percent. Nearly three years later, unemployment is still over nine percent, with many more stopping their job searches. This not only failed to stimulate the economy, but it crippled the private sector, created a permanent class dependent on government charity, and caused record deficits and debt.
This "stimulus" was a predictable failure. Government cannot create wealth, only increased production from consumer demand can do that. Government can only take money from some and redistribute it to others, which doesn’t stimulate the economy. Moreover, money taken by government means there is less money in the private sector to innovate, invest, increase production, and create jobs.
Furthermore, government handouts are usually granted for political reasons. It’s no surprise that the few jobs the "stimulus" created were mostly in districts that had supported Obama and the Democratic Party. Some pro-Democratic districts had lower unemployment rates than the national average but received funds anyway.
The "Jobs Summit"
In December 2009, President Obama conducted a "jobs summit" to learn ways to create more jobs. Nearly two years later, with unemployment even higher, Obama apparently still hasn’t learned that the obvious way to create more jobs is to reduce government intervention in the economy.
At the "summit," Obama denounced small business owners for squeezing "increased productivity out of fewer workers, and this type of cost-cutting has become embedded in their culture… While this is good for profits, it’s not translating into hiring" and thus must be changed. This highlights Obama’s ignorance of how free market capitalism works.
A successful business always strives to produce more with less, but Obama believes this is a bad thing. Obama also criticizes cost-cutting, even though any successful business depends on as much effective and efficient cost-cutting as possible.
Obama believes that businesses are causing high unemployment because they are hoarding their profits and refusing to hire workers because they have learned to do more with less. But business owners are cutting back because they’re worried about the future, especially considering that Obama is demanding a $1.5 trillion tax increase. How can business owners hire more workers when they have to pay more taxes?
The HIRE Act
This controversial law was passed by the Democratic Congress and signed by Obama in 2010. This authorized yet another $100 billion in government spending on federal public works projects. Like most government spending, allocations were based on political considerations, not concern for the unemployed. Most of the money went to union leaders who back the Democratic Party.
Moreover, the money used for this law consisted of capital taken from the private sector, thus offsetting any legitimate job growth during that time. It’s no coincidence that this law did nothing to decrease unemployment.
In addition, the law enacted several tax incentives for businesses to hire workers. But these were offset by several tax increases imposed retroactively, including an increased estate sales tax. The law also provides a $1,000-per child tax credit for low-income people. This only provides more welfare to encourage people to have more children while struggling to raise the children they already have.
The "Jobs Act"
Now, after all the past failures, Obama has brazenly proposed even more "stimulus" of $450 billion in taxpayer-funded spending, to be paid for by $1.5 trillion in tax increases on high-income Americans. There was no job growth in August and the economy is stagnating, but Obama still proposes massive tax hikes on job creators even though he said in 2009, "Normally you don’t raise taxes in a recession, which is why we haven’t, and why we’ve instead cut taxes."
Obama is targeting the wealthy, despite the fact that the 10 top percent of earners already pay about 70 percent of the total federal income tax. Since most of the top earners are the biggest job producers in the country, this tax will undoubtedly hurt job creation. This will reduce productivity, slow economic growth, depress wages and salaries, and decrease household wealth.
It is clear that the government has squandered over $1 trillion in taxpayer money through failed redistribution programs. Who in their right mind would be willing to give this government even more taxpayer money to squander?
Conclusion
In addition to a jobs crisis, this country is in a debt crisis, largely due to failed spending programs initiated not only by Obama but by past administrations as well. The debt will be passed on to future generations in the form of higher taxes, higher inflation, and higher interest rates that will harm the overall cost of living. The crisis will only become worse if spending is increased because the government has no more money to spend.
If politicians were serious about creating jobs, they would work toward entitlement reform, including repealing the Obamacare law enacted in 2010. This would reduce business uncertainty about future regulations and taxes. Cutting wasteful spending and overhauling the obsolete tax code are other ideas that must be explored.
Nearly three years of increased federal spending and regulation has made the economy worse. And yet Obama is asking for even more taxpayer money to spend on programs that have already failed. At a time when the national debt is unsustainable, Obama is again proposing that we spend now and save later. The country can no longer afford to let him have his way.
WalterCoffey.com
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