Don't Go There

In the last sketch we highlighted just why it is that any economic resuscitation will take longer than expected. Now we hear rumors of a second "stimulus". Such legislation will only further retard a recovery.

Supporters of the stimulus bill, even many of its critics do not understand (or choose to ignore in the case of some politicians) the key issue. Government spending does not spark the economy on a net basis, for the simple reason that it takes away an equal amount from the private sector. There is zero evidence that it ever worked, plenty that it hasn't.

Few of us are foolish enough to think that the government can spend as efficiently as the private sector. If we gave one dollar to the private sector and one dollar to government and instructed both to have at it, all but the willfully blind will acknowledge that the private sector can fetch more bang for the buck. But the stimulus package is not that. It actually robs the private sector of a dollar - taxes, or borrowing, or inflation.

The obvious solution to our problem then (no secret to Kennedy or Reagan) is to enable the private sector; a 6-month tax holiday for example, roughly the equivalent of the $750 billion "stimulus" package, would work. Why won’t it, or something similar, happen? As an ex-UCLA classmate of mine exclaimed the other day - "Are you nuts? How naive can you be? A dollar spent on a new lawnmower at the hardware store does not generate a single vote. A dollar spent on a new job mowing grass along an interstate highway does." That pretty much says it all. Oh, except one more thing. Our friend also reminded us of the infamous Bill Clinton line of Jan/99, when the federal government ran a surplus. Someone asked Clinton that given the surplus, could we have our money back, a tax cut maybe. His response: "We could do that and hope you spend it right...But....if you don’t...here’s what’s going to happen...." Ah, but for the ignorant unwashed masses.

Some of our friends from the left run real businesses. They curse the economy - naturally it's all Bush’s fault. No. They own this crisis.

Robert Craven