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Wednesday, February 04, 2009
John Stossel :: Townhall.com Columnist
We Can't Spend Our Way to Prosperity
by John Stossel
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What was the biggest suprise of Election Day?



Washington never changes, no matter who's in power. Give a gang of politicians a chance to spend our money, and they will spend it -- the more the better. An economic downturn is hog heaven; for now they have a justification to spend big time: "economic stimulus." Anything and everything can be proposed as long as it can be said to "inject money into the economy" and "create jobs."

Does $819 billion sound like too much? Au contraire. It may not be enough. Ask Paul Krugman and the other Keynesians. The danger, they say, lies in spending too little. Not to worry. The Senate will probably throw in more money. And the Obama administration says this is just the beginning. "While many of the projects are a down payment on long-term goals, including energy policy reform, health-care reform and the expansion of infrastructure investment, the goal has never been to accomplish every legislative goal in one fell swoop," White House spokeswoman Jen Psaki said.

House Speaker Nancy Pelosi thinks that hundreds of millions of dollars for family-planning services will stimulate the economy. My colleague George Stephanopoulos of "This Week" was incredulous. But Pelosi was ready for him: "Well, the family planning services reduce cost. ... The states are in terrible fiscal budget crises now. ... [C]ontraception will reduce costs to the states and to the federal government".

Fortunately, the White House saw that as a stretch and distanced itself from Pelosi. "The principles of what he [President Obama] thought should be in the package -- that wasn't part of that," said Deputy Press Secretary Bill Burton.

That glitch aside, an agreement has emerged on how Congress should "stimulate the economy." The final bill will contain spending on states and localities, roads and bridges, unemployment benefits, "green" technologies, etc..

President Obama has vowed that no earmarks -- special appropriations to benefit particular congressmen -- will sully the final package. But in the Wonderland called Washington, things are never what they seem: "The result, as The Associated Press learned in interviews with more than a dozen lawmakers, lobbyists and state and local officials, is a shadowy lobbying effort that may make it difficult to discern how hundreds of billions in federal money will be parceled out".

What a surprise. Continued...

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About The Author
John Stossel blogs at http://blogs.abcnews.com/johnstossel/ is an award-winning news correspondent and author of Myths, Lies, and Downright Stupidity: Get Out the Shovel--Why Everything You Know is Wrong.
 
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Just breezed over the stimulus package..
and it sounds great. Unfortunately, we couldn't afford to do these projects before the economic collapse. How in the hell are we supposed to be able to afford them now? If we had all of this money in our reserves like we should have had then i wouldn't have a problem with it. But we don't have it, yet were spending it like we do. We will print money out of thin air and circulate it into the economy. Which will inturn raise the price of goods and services worldwide. Which will leave the poor poorer. So maybe it is good. Then the poor will not be purchasing as much fast foods, cigarettes, and alcohol and the economy will fall even further. Then the strong will survive and flourish. Years of spending like drunken sailors have finally caught up with us. I don't care what President Obama says. It is the fault of the consumers. Nobody made these people sign these unaffordable loans. They got what they deserved.

Keynes: How much is too much?
I read an article the other day that said that deficit spending is OK, if not called for, as long as the deficit is below 4% of GDP. Now, I don't know what the "limit" is, but Obama is moving us in the direction of annual deficits of more than 10% of GDP. I think that deficits are fine, as long as they are of reasonable size.

And one thing you don't hear much about is that these huge deficits are going to put us in the area of a total government of more than 100% of GDP, and I don't think that's surviveable. At least when the annual deficits are small, the economy can grow faster than those deficits, so the total debt never overtakes GDP. A declining economy, as we are in now, can absorb reasonable deficits for a year or two, and eventually make that surplus (economic growth over deficit) up. But Obama's deficits, so much so fast, will hobble the economy forever.
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