We must cut taxes, curb spending and crimp regulations
By WILLIAM F. SHUGHART II|Bellingham Herald
OXFORD, Miss. During the Great Depression, economist John Maynard Keynes recommended increasing federal government spending, financed by borrowing, to boost the U.S. economy. It didn’t matter how the new money was spent. If no better use could be found, Keynes suggested building pyramids or burying currency in bottles for people to dig up.
Keynes’s theory that increased public spending would offset declines in consumer and business spending proved wrong. The unemployment rate remained in double digits until the “Greatest Generation” was called upon to sacrifice its blood and treasure to defeat the Axis powers.
The failure of Keynesian pump-priming seems to be lost on recent White House occupants. George W. Bush twice tried to stimulate the economy, once after 9/11 and again in the early days of the recent financial crisis.
His efforts, such as income-tax rebates, show up as little more than a blip on a chart of U.S. Gross Domestic Product growth.
President Barack Obama has tried more of the same – with no greater success. He claimed the American Recovery and Reinvestment Act would boost the economy and “save or create” millions of jobs. The chairwoman of his Council of Economic Advisers promised the unemployment rate would never rise above 8 percent. Instead, the economy is growing at a snail’s pace and unemployment seems stuck at 9.5 percent. The rate is nearly double that if one includes workers who have lost their jobs and given up hope of finding new ones.
President Bush’s stimulus initiatives cost about $200 billion each; the Obama Administration’s first attempt to turn the economy around cost $868 billion. Now there’s foolish talk of more.