Obama: We’ll spend our way out of downturn, the rest of us should look out!

Barack Obama just doesn’t get it. The previous economic stimuli that he and his cronies in Washington have foisted upon us as the chart below shows:

Despite the fact that the unemployment rate has now gone back down to 10 percent, Obama’s worst case scenario (no stimulus) would have resulted in the unemployment rate rising to no greater than 9 percent.

According to this article,

A major part of his package is new incentives for small businesses, which account for two-thirds of the nation’s work force. He proposed a new tax cut for small businesses that hire in 2010 and an elimination for one year of the capital gains tax on profits from small-business investments.

Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year.

He called for more government spending on infrastructure projects such as roads, bridges and water projects and for new tax breaks for consumers who invest in energy-efficient retrofits in their homes. This could be what some administration officials have called a “Cash for Caulkers” program modeled on the now-expired Cash for Clunkers program of tax rebates for people who turned in old cars for more fuel-efficient models.

While the tax cuts may not be actively harmful as the new spending is, Obama (and the rest of our political leaders) need to understand that government spending is the problem, not the solution, and that economic stimuli are ineffective when compared with low taxes and reasonable regulations. Unfortunately, no one is following this prescription, so the national debt will continue to grow, thus creating real problems for the US economy.

The Gross National Debt

Print Friendly, PDF & Email

2 Replies to “Obama: We’ll spend our way out of downturn, the rest of us should look out!”

  1. I find it interesting that spending has become such a big issue. As a fiscal conservative its always been an issue with me. I’ve watched as the Republicans, the party of fiscal responsibility ran up the the National Debt. Of the current $12.1 National Debt, over $8 Trillion is easily attributable to the Republican Party. Reagan, both Bush’s ran huge deficits. Reagan took the National Debt from $930 Billion to $2.7 Trillion. Of course his tax cuts are viewed as the solution to everything but no one talks about the huge deficit he ran up while doing it. Tax cuts have shown to be deficit enhancing. When Clinton raised taxes in 1993, he was able to balance the budget in 1998, 1999 and 2000. Our most recent Republican, W Bush, inherited a balanced annual budget yet cut taxes and added $5 Trillion to the National Debt. Tax cuts are not the panacea we are led to believe. The Laffer Curve is a model and does not mimic reality.

  2. Mark, I’m not a Republican and I have repeatedly criticized Bush and his spending. Here’s one example, but google my writing on Bush and spending: http://riograndefoundation.org/errorsofenchantment.com/2009/07/21/whos-responsible-for-todays-deficits/

    The problem, contrary to your statement, however, is not tax cuts, but out-of-control spending. Clinton balanced the budget largely(and justifiably) by reducing military spending, but he was generally pretty fiscally conservative: http://www.cato.org/pub_display.php?pub_id=8137

    Tax cuts without reductions in the overall size of government (or at least a degree of fiscal restraint) are indeed a chimera and Bush is an obvious example of this, but that doesn’t mean that the deficits were caused by tax cuts (and of course Obama has raised taxes and expanded upon Bush’s big-spending ways).

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.