Saturday, January 24, 2009

Obama Takes Stimulus to the People

By John Coffey

Obama Takes Stimulus to the People
Read the article here.   The video is worth watching.

I think that the following principles are either self evident or can be backed by evidence...
  1. Debt public and private is the main reasons why are in the current economic mess that we are in.
  2. The Community Reinvestment Act, championed by Democrats, required lenders to lend to people who were not credit worthy.   Fannie Mae and Freddie Mac, also championed by Democrats, bought up those loans and sold them as trillions of dollars worth of securities with the implied backing of the federal government.   When those securities lost some of their value due to loans going bad, businesses and banks who had invested in those securities faced financial crisis.
  3. The government already has a 500 billion dollar annual deficit with a ten trillion dollar national debt piling up. Yet the government suddenly decides that it can double that already massive deficit in the name of economic stimulus.
  4. In your own life, you can not borrow massive amounts of money, year after year, decade after decade, without going bankrupt.   Why should the federal government or the national economy be any different?
  5. We need economic growth for the benefit of our people and to grow our way out of the current financial downturn.
  6. Taxes discourage economic growth because they take away incentive. Milton Friedman showed that throughout the word, the GDP of almost every country was inversely proportional to how much each country taxed its citizens.
  7. However, that is not even our biggest problem right now...
  8. The government has to get its money from somewhere.   It either taxes it, prints it, or borrows it.   It cannot produce wealth out of thin air.
  9. Government spending takes resources from the economy, such as labor, material, credit and capital, and spends those resources on questionable projects.   You can know for certain that some of these projects are going to be pork barrel and wasteful spending.   The government takes productive assets and resources and turns them into unproductive assets.
  10. A recent Harvard study showed that economic growth is inversely proportional to how much the government spends.
  11. Obama is trying to spend us into prosperity.   This isn't so much a stimulus package as it is a Democrat wish list of all the projects they would like to fund.
  12. How would this work in your own life if you tried to spend your way into prosperity when you were already massively in debt?
  13. Over the last ten years, federal government spending has gone up from around 19% of the economy to around 28% of the economy.   I have seen figures where if you add in state and local government spending, the entire government is spending nearly 50% of the economy.
  14. Government got us in this mess.   More government is not going to solve the problem.   It is going to make things worse.
  15. This is not the way to grow the economy.   We should be doing the opposite of what we are doing now.   We should cut government spending and not increase it.

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