By Louis Avallone
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Let’s get right to the point. And it’s a point that all Americans can appreciate, even some liberals. Okay, here it goes: By now, you have heard that President Obama, in a speech to a rare joint session of Congress, proposed $447 billion in new government spending to create jobs or to otherwise stimulate the national economy.
Now, we have been over this ground before. As you know, a couple of years ago, Congress spent nearly $800 billion to create (or save) jobs too. Instead, unemployment rose from 7.6% to 9.3% (with an effective unemployment rate of 16.2%, when you count the unemployed folks who have given up looking altogether).
In fact, the Obama administration spent nearly $17.2 billion (or half of the $38.6 billion set aside for the administration’s “green” energy programs) and yet only created 3,545 permanent jobs. This calculates out to a staggering $4,853,000 per job. Really? And one of the biggest beneficiaries of the stimulus funds was the now bankrupt Solyndra, the White House protégé for “green” jobs development. Solyndra received $545 billion in government-backed loans to build solar panels…and now the taxpayers will get thrown down the stairs (again).
I mean a $528 billion loan guarantee? And now it is gone? Are you kidding me? Whose idea was this? That’s almost as much as the comparatively paltry sum of $545.5 million that Obama set-aside in the stimulus bill for the Small Business Administration to assist all small businesses in all 50 states.
Now, Obama wants to spend another $447 billion dollars in his jobs bill, to create (or save) jobs and stimulate our economy? Haven’t we been here, done this?
Look, if an $800 billion stimulus bill has increased unemployment and inflation, why repeat the same mistakes? Or to put it another way, in the words of Albert Einstein, “We can’t solve problems by using the same kind of thinking we used when we created them.”
So, with that said, let’s talk about that jobs bill again for a moment. Obama is offering employers a $4,000 tax credit for hiring someone who has been out of work for at least six (6) months. Sounds good, right? But hiring is not a discretionary decision. Only the customer, the marketplace, can provide the necessary incentive to a business, not a government bureaucracy. Hiring is not like receiving a coupon in the mail for “2-for-1 enchiladas on Tuesdays” and then deciding to go out to eat for enchiladas on Tuesdays.
I mean, there’s really only 2 possibilities here, in terms of providing a hiring incentive to businesses: Either the $4,000 Obama incentive will be pointless because it will have been paid to an employer who was going to hire someone out of work for six (6) months anyway, or you are encouraging businesses to hire employees that they may not be able to keep fully employed in the first place. Again, the customer, the marketplace, is the genuine incentive that establishes the foundation for authentic economic growth.
And look, let’s go over this again for the administration’s sake: Governments do not create wealth. They merely move it around. At the end of the day, the source of government spending is still revenue from taxpayers. The government cannot inject money into the economy without first taking money out of the economy in the form of debt, taxes or printing new money.
Many in Congress, and in the White House, still don’t get it. They believe in the theory of Keynesian economics, and the “multiplier” effect. This theory presupposes that for every $1.00 in government spending, there will be a greater than $1.00 economic activity that results. This is why folks like Nancy Pelosi believe that extending jobless benefits “creates jobs faster than almost any other initiative you can name.”
Technically, Pelosi is correct, but it is a fallacy. Extending jobless benefits does support local economies because folks have more money to spend. But this is like giving $5 to your wife or husband. Yes, they have $5 to spend now, but you didn’t boost your household income by $5, you merely redistributed the $5, from your hand to theirs, and you have $5 less to spend now, but they have $5 more.
Government spending works the same way. It doesn’t boost national income or our standard of living. It merely redistributes income, less the cost of the bureaucracy to manage it all.
This proposed jobs bill, and the ensuing $447 billion in new spending, will increase capital gains taxes by $18 billion, levy $40 billion in new taxes on oil and gas companies, and collect $40 billion a year in new taxes on individuals making over $200,000 a year.
But monkeying around and choosing the winners and losers in the free market is a high wire act without any safety net below. We know the consequences; from the housing credit collapse to “cash for clunkers”…one wrong move begets another, and then folks, their families, and their livelihood, get hurt.
Messing around with the U.S. economy is like the 1972 Jim Croce song, “You Don’t Mess Around With Jim,” which lists out some equally foolish activities that will definitely result in similarly unwanted consequences. The song goes like this: “You don’t tug on Superman’s cape. You don’t spit into the wind. You don’t pull the mask off the old Lone Ranger. And you don’t mess around with Jim.”Mr. Obama, after all this time, please don’t mess around with “Jim.” And we won’t tug on your cape.