Last week, he offered that the private sector was "doing fine" and that the public sector needed to spend more money to improve the overall economy. The president really does believe that prosperity comes from government spending. Throughout his presidency, he has extolled government spending programs -- from the interstate highway system to NASA to "clean" energy -- as representing the best in the American character. Other leading Democrats agree. In 2010, Nancy Pelosi described unemployment checks as "one of the biggest stimuluses to our economy."
The percentage of government spending that goes to infrastructure, basic research and other "investments" that arguably conduce to economic growth is infinitesimal. In 2010, two-thirds of the federal budget went to transfer payments -- Medicare, Medicaid, Social Security and unemployment. Adding payments to federal civilian workers and the military, checks to individuals consume 80 percent of the budget. Most of the rest goes to interest on the debt and other federal departments, chiefly the Departments of Health and Human Services and Justice, as well as the Department of Housing and Urban Development.
Government hiring may be necessary, but the idea that it is stimulative is perverse. In order to hire a teacher or a diversity specialist or a tax collector, the government must extract money from taxpayers to pay their salaries. The sum total of water in the pool does not increase when you scoop water from one end and pour it into the other. If the government worker is inefficient or incompetent, you are subtracting from the total water level. The Keynesian "multiplier" has been shown to be an illusion.
If a private employer, by contrast, creates a new business and hires people, he has taken nothing from his fellow taxpayers and is creating wealth that will support those he employs, as well as boost tax receipts to the government.
If governments could spend their way to prosperity, Greece would be an economic powerhouse and California would not be facing a fiscal crisis. If governments could spur the economy by borrowing and spending, there would be no European debt crisis to disturb the sleep of David Axelrod. In fact, there would be no need for the Buffett Rule or any other tax Obama has demanded.
Didn't liberals scoff mercilessly at the caricature of supply-side economics -- the supposed claim that tax cuts would pay for themselves? Now they tout spending yourself into the black without a hint of embarrassment.