Obama is spending borrowed money so fast there will be no way to pay it back without severe economic pain, the kind that will eclipse any possible economic growth that could come from his spending in the first place -- if it were to work as he has promised, which it won't and can't.
The Associated Press just reported that 10 months into Obama's stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely has helped the beleaguered construction industry. It didn't matter whether a lot of money was spent or no money was spent; local unemployment rates rose and fell completely apart from the injection of stimulus dollars. The AP's analysis was reviewed by independent economists at five universities, who confirmed the stimulus strategy isn't working.
We shouldn't need to provide the theoretical reasons government spending doesn't work in order to convince skeptics, because we have abundant empirical evidence that it doesn't and never has, including FDR's New Deal.
But for you stubborn types, Heritage Foundation scholar Brian Riedl argues that the theory behind such spending is flawed. He has just published a paper explaining why these programs don't work.
Obama's stimulus strategy is based on Keynesian economic theory, which holds that an economic recession characterized by demand's falling below supply can be corrected through government spending. Keynesian models assume that government spending adds money to the economy, so it almost doesn't matter where the money is spent; it will stimulate economic growth.
Not so fast, says Riedl. "Congress does not have a vault of money waiting to be distributed," he says. (Now that's the understatement of the new year). "Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another." (Hint: Obama knows that!)
Folks, it would be bad enough for Obama to have spent this money borrowed from future generations if it did stimulate the economy. We still couldn't justify economic growth on the backs of our children and grandchildren. But his plan doesn't work. What does that tell you?
Truly, it's amazing his approval rating is in double digits.