The question facing America is: who will lead us out of this economic crisis?
George Washington answered this question for us in a letter to Benjamin Harrison in 1784. He wrote: “A people... who are possessed of the spirit of commerce, who see and who will pursue their advantages may achieve almost anything.”
Unfortunately, today, many elected officials, the media, and even big business have lost confidence in “the spirit of commerce” – in the American free enterprise system - and are looking to government for the answer. A recent Newsweek cover declared “We are all Socialists now” and Congress and President Obama just passed a stunningly partisan $787 billion “stimulus” bill. From the TARP to special loans to GM and Chrysler to a new $275 billion mortgage entitlement program, bailout nation is in full swing.
Yet if more government spending could spark sustained economic growth, we'd be in a boom right now from the reckless expansion of spending over the last six years. President Bush nearly doubled the national debt during his two terms, and President Obama is thinking much bigger, proposing $1.4 trillion in new spending programs in just his first month in office. It is possible that the U.S. government's deficit in fiscal year 2010 will be larger than the entire federal budget in 2000.
What's more, the big spending approach to the economy has another nasty side effect that worsens the downturn: uncertainty. The unpredictable and constantly changing rules, political interventions, and vague new government programs only adds to the chaos. The possibility of government bailouts freezes the market, slowing badly needed corrections and adjustments. For example, why should banks sell distressed assets today when Uncle Sam may come in and buy them in the future? And it is never helpful to the confidence of the nation when the President and Treasury Secretary are using words like “economic collapse” and “catastrophe” to scare Congress into passing bailout after bailout.
Even while he embraces this fear-mongering, Washington-first approach, President Obama admits that the current spending binge is not sustainable. That is why it must stop, now. It is time for America to return to its roots and look to entrepreneurs in the private sector to lead us back to prosperity.