FRAUD

More "Stimulus" ? It will not work. We know that, our readers know that, Obama knows that, almost every economist knows that. The difference between most of us and this administration - most of us are not chronically disingenuous.

The latest plan is called a jobs plan, stealth for stimulus. Please. It is in fact another $50 billion in infrastructure spending (e.g., roads, trolleys, trains, and sewer systems). Government infrastructure spending is widely believed by the masses to be a quick ticket to job creation and economic prosperity. That is false. This plan is the administration's attempt to pull another fast one at the expense of all of us. This is a scam designed to take in the masses and appease the left.
We have explained before why these schemes don’t work. Let’s review. The track record of government stimulus is all failure. The New Deal doubled gov’t spending but unemployment remained above 20% until WWII. Japan’s 10 stimulus bills over 8 years had zero impact. The 2009 BO "stimulus" was a flop, exactly as we predicted in this blog.

Why? Start here: Where is the world does this money come from? Thin air? Only if the Fed is in cahoots with the administration. A slush fund put away for such emergencies? Come on. It comes dear readers from areas where it could be put to better use.

So again, from where do these funds arise? Hear the term "crowding out" before? The funds arise from taxes, from inflation, from gov’t borrowing. That’s it. If taxes, Obama is only redistributing existing purchasing power. If from borrowing either from us or from foreigners, there is then exactly that offset in less to invest or spend in the private sector, which is by the way, always more efficient. (Borrowing from China and others will only adjust the balance of payments by equally raising net imports, leaving total demand and output unchanged.)

Haven’t yet accepted the fact you’re being taken? Obama wouldn’t do this to you? Still believe what you hear from labor union types or partisan Nobel laureates? Fine. Don’t take our word for it. How about from the government itself, in this case the Congressional Research Service, which noted, "To the extent that financing new highways by reducing expenditures on other programs or by deficit finance and its impact on private consumption and investment, the net impact on the economy of highway construction in terms of both output and employment could be nullified or even negative."

Look at this example. Obama’s guys claim $1 billion in highway spending can create 47, 576 new jobs. So assume they borrow that money from the private economy (as they claim they intend to do). From the Heritage Foundation, "Highway spending simply transfers jobs and income from one part of the economy to another. The only way that $1 billion of new highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven."

The funny thing is, almost no one argues with this. The Dept of Transportation and the GAO confirmed the statement above. Obama’s counting on the lack of scholarship of the masses to get this deal done.

Fellow critics of this fraud argue that it’s like taking water out of one end of a swimming pool and putting into the other. They’re partly right, but that’s only a wash. Most of these programs are in fact a retardant, in that they take a dollar from folks who can spend it productively and give that dollar to those that have demonstrated they can’t.

Think of this the next time you hear Obama harping on stimulus. At least you’ll know up front you’re about to be shorn (ok, this word is a noun, but if Faulker and Twain got away with it, so can we).

Robert Craven