Read here how governemnt spending and the unemployment rate always stays in sync. ...
We are in for some serious trouble.
The reality is that every dollar the federal government spends must be borrowed or taxed from the private sector. And the more resources the government usurps from the private sector, the less job creation occurs.
It is also true that most government spending is less efficient than private sector spending. While there may be a few areas that government spending makes sense -- let's say defense or some R&D -- the vast majority of government spending has nothing to do with creating new wealth. It often competes against the private sector -- the postal service and Amtrak -- and much of it is pure re-distribution.
So, this raises a serious question. Why is the government trying the same old spending stimulus that the evidence clearly shows does not work? President Carter spent billions of dollars on alternative energy plans, but unemployment rose anyway. If the U.S. and the new administration are serious about "change" and "getting rid of the old ways of doing things," why not try something truly new?
With nearly $1 trillion dollars to spend, the government could do some astounding and positive things. The U.S. could rewrite its tax code and move to a flat tax that would make the U.S. much more competitive in the global economy. Or, we could rethink and rework the entire entitlement system, so that it wouldn't eat our budget and economy alive like Pac-Man in the next few decades. Charles Murray, in his 2006 book, In Our Hands, laid out a plan to give every American over 21 years old $10,000 per year for life in exchange for giving up Social Security, Medicare and every other welfare state program.
By Brian Wesbury on 2.6.09 @ 5:37P
The American Spectator
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