Possible problems with President-elect Barack Obama’s economic stimulus plan must be thoroughly vetted. While only a few details are known, one overlooked issue is that it could create a major electoral advantage for Democrats at taxpayer expense. That would be unacceptable for what is being touted as a nonpartisan measure, and gives Republicans yet another reason to oppose it if not restructured.
President-elect Obama is constantly emphasizing the need for Congress to pass his stimulus plan. The details are vague. All that is certain at this point is that it is approximately one trillion dollars and Mr. Obama says it will create three million new jobs.
Government cannot create self-sustaining jobs. Government doesn’t create value; it takes it from us as taxes. While a government job involves work and earns a paycheck, every government job is a burden on the private sector because it takes money away from the people. While some of those jobs, such as military personnel or FBI agents, are essential for our nation, it’s no secret that government is full of countless bureaucratic and wasteful jobs that the private sector can better perform.
Indeed, massive government spending sometimes destroys more jobs than it creates. Every dollar the government takes in through taxes is a dollar taken out of circulation from the economy. It’s a dollar that does not go to your local restaurant, or hardware store, or movie theatre. When government spends massive sums financed through taxes, it can destroy more jobs in the private sector than it creates in the public sector.
The only other way to finance massive government spending is through simply printing more money. Government can do that; it controls the printing press. However, creating money out of thin air doesn’t create wealth. If the money supply rapidly expands while the amount of goods and services being produced declines (the definition of a recession, which America is in) the result is massive inflation. This inflation penalizes saving and investments and burdens long-term financial planning and capital formation, worsening the economic situation.
So whether it’s through massive taxes or massive injections of new money, a major spending bill entails consequences. And when this amount of money is at stake, the sheer size of it could make the consequences severe.