The View From 1776
Sunday, December 07, 2008
Liberals, both Republicans and Democrat/Socialists, cynically keep reciting socialist fairy tales to a public, which unfortunately, believes them.
Megalomaniacal President Franklin Roosevelt in the New Deal created the myth that government can manage the economy as if it were a single private business. Bureaucratic planners, operating under Fascist-style collective powers to control agriculture and business, wrapped the economy in red tape.
Everything. however, boiled down to the proposition that problems in the economic cycle could be fixed only with large doses of government deficit spending.
It failed to work - in fact, made matters far worse - from 1929 until 1941.
It still doesn’t work.
Read the recent Wall Street Journal editorial, Of Jobs and ‘Stimulus.’
On that score, it’s worth recalling that the vaunted bipartisan “stimulus” of last February has been a miserable failure. The National Bureau of Economic Research—the outfit that formally identifies “recessions”—has now said that this downturn began in the fall of 2007. The tax rebates and spending were supposed to spur consumption and growth, but they did nothing to alter incentives to take risks or invest. Though the “stimulus” was as avidly promoted by Democrats like Larry Summers as it was by the White House, Republicans got the blame on November 4.
Nonetheless, the lesson Washington seems to be drawing is that we should do it all again, only more so. Democrats are now mooting as much as $700 billion in spending, on more jobless benefits, roads, rapid transit and anything else the political class has been trying to fund for years. While this will create some jobs, it won’t re-ignite the business confidence that will spur investment and new private job creation. As we’ve been saying for more than a year, the fiscal “stimulus” the economy really needs is a big tax cut—one that is immediate, marginal and permanent. It worked for Jack Kennedy and Ronald Reagan; Barack Obama should try it.