At a meeting of European think tanks several years ago, Israeli Prime Minister Binyamin Netanyahu described a training exercise for new soldiers in the Israeli Defense Force. Recruits would have to run across a field carrying their partner on their back – and then switch positions, so that the original runner would be carried on the way back. How do you think the two times compared when the partner on top was overweight?
Netanyahu explained that the exercise was a metaphor for the economy: the government was the partner on top, and the private sector on the bottom. Even if it tried hard, the private sector could not perform well when weighed down by a bloated, uncooperative government. As a team member, the responsibility of the government is to be as lean and pared down as possible and to ensure that its partner – the private sector – is as strong and fit as possible. Alas, the current administration doesn’t seem to get this.
We learned recently that the Troubled Asset Relief Program cost $200 billion less from than the $341 billion originally projected, which the administration seems to consider a slush fund that can be use for “job creation.” In a speech delivered at the Brookings Institution, the President called for the “leftover” money (borrowed from future generations, but who’s counting) to be redistributed to his preferred industries in the name of spurring job creation. Of course, giving out $200 billion is also a great way to make friends and influence people – just ask Louisiana Sen. Mary Landrieu.
The job creation proposals currently on the table are little more than a thinly-disguised income transfer scheme, which would do nothing to stimulate long-term economic growth while adding billions to the national debt (currently at a staggering $12 trillion). In 2009, interest alone on the debt totaled $202 billion, and is expected to exceed $700 billion in 2019, according to the Office of Management and Budget. Expanding government programs that add to the debt only digs our nation into a deeper hole. The more we borrow, the more costly our debt will become, particularly as interest rates rise. On December 8, credit rating agency Moody’s Investors Service stated that worsening public finances in the wake of the global financial crisis may “test the AAA boundaries.” Already, American children born today inherit a $44,000 debt. Do we want to leave a legacy like that – or worse?