Thursday, December 18, 2008

A Ponzi Scheme?

It should be recalled how many times during the last four years our friends on the Left bemoaned the increasing national debt, and the number of Democrats who declared that we were spending ourselves into oblivion. These statements of concern did and do reflect a real problem, and Republicans' refusal to act like Republicans and conservatives has done more damage than anything else to sully the GOP political brand nationally. The party opposite only seems to care about deficit spending when they aren't the ones in power to do the spending.

Now that the Democrats control government at the federal level almost completely, they are ready to spend our money like they earned it themselves:

Eager to jolt a worsening economy back to life, President-elect Barack
Obama's aides are assembling a two-year stimulus package that could cost nearly
$1 trillion, dwarfing last spring's tax rebates and rivaling drastic government
actions to fight the Great Depression.

Obama is promoting a recovery plan that would feature spending on roads and
other infrastructure projects, energy-efficient government buildings, new and
renovated schools and environmentally friendly technologies.

There also would be some form of tax relief, according to the Obama
team, which is well aware of the political difficulty of pushing such a large
package through Congress, even in a time of recession. Any tax cuts would be
aimed at middle- and lower-income taxpayers, and aides have said there would be
no tax increases for wealthy Americans.

As readers know, I am all for instituting tax cuts at every level of government wherever it is possible to enact them, because I believe that lower taxes lead to economic growth. However, these numbers don't add up. You can't add $1 trillion to the federal budget out of nowhere without finding a way to pay for it, and that means that either someone's taxes will go up, or the federal deficit will balloon to unthought-of levels. It reminds me of Bill Clinton promising "I will not raise taxes on the middle class to pay for these programs," and then humming a different tune once in office after the cost of his economic plan became crystal clear. The Clinton Ponzi scheme ultimately led to a Republican Congress in 1994. Because of the sour economy, the President-Elect is hoping he gets a pass:

But the president-elect sees his plan as far more than fending off the wolf. He has said repeatedly that in crisis, he sees opportunity -- to rebuild a national infrastructure that has been neglected for decades and to make down payments on policy initiatives that would have taken years to negotiate.

Everyone agrees that we are in a real economic rut, even though we may disagree on how to fix it, and even on the cause of the Depression. However, the important thing to remember is that no nation has ever spent itself into prosperity. Despite the wishful thinking of some in the party opposite, it literally took war mobilization to get the country out of the last Depression, and we did not mobilize for war as a nation for war to be an effective economic stimulus (we have waged war without mobilizing for it as a people), and if Barack Obama remains true to his promise, we won't be on a wartime footing. Hence, we cannot fight our way out of this Depression, so the Democrats' solution is to spend our way out.

Who will pay for this, when even the wealthy cannot afford luxuries the way that they used to, and are not buying them?

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