The folks over at the New York Times are keeping up their tradition of shilling for big government spending. In a recent column, the Times suggests that a recent uptick in government spending is creating prosperity, and boosting the economy. According to the Times:
For a long stretch, government spending cutbacks at all levels were a substantial drag on economic growth. Now, finally, relief is in sight. For the first time since 2011, local, state and federal governments are providing a small but significant increase to prosperity.
Yeah… Government is taking your money, spending it on redistributive welfare programs and special interest projects, thus creating a “stimulus” effect on the economy. Correct me if I’m wrong, but couldn’t we just cut out the middle-man, and let me spend my own money? (More on this later.) The Times continued:
Since the stimulus programs approved in 2008 and 2009, Republicans in Washington have pushed to cut federal spending; even the $1.1 trillion budget bill that Congress recently passed to keep the government operating through September abides by spending caps and includes further trims.
Oh, the horror! Spending caps! (GASP!)
So… How does the NYT’s economic analysis stack up against reality?
Well, not well. First of all: they’re wrong. Government spending has actually been on the decline (as a percentage of GDP) since 2010. After the (nearly) one trillion dollar “stimulus” package (not to mention George W’s final year as a big spending Republican) it’s pretty easy to see how the growth of government spending has slowed… But that’s all that has happened. It’s only slowed.
While there has been a slight bump in government spending over the course of the last year (thanks largely to higher than predicted tax revenues) it is still far below the annual growth we saw in the first couple of years of Barack Obama’s tenure. In other words: We spent a trillion dollars on “stimulus” and got +10% unemployment… Now that we’ve adopted some spending caps (gasp!) we’re seeing a little bit of economic improvement.
But, more importantly than the numeric details of government spending (which Daniel J Mitchell covers nicely here) these Keynesian theorists seem a little confused on something:
Where exactly do these New York Times columnists imagine the government gets its money? I mean, is the term “tax dollars” really too complicated for these folks to put in context? Every cent the government spends is first confiscated from you, me, our employers, and/or our clients… Or borrowed from future taxpayers. (That’s right… We’re taxing people who aren’t even born yet.)
Government spending isn’t exactly an added benefit to economic conditions. It is merely the government spending the private sector’s money without much regard to market forces. Heck, give me a couple trillion bucks from other people, and I bet I could create a little stimulus of my own… Or, better yet, let those trillions remain in the hands of the folks who earned it, so they can spend it as the market deems necessary. You’d be surprised how far $500 billion can go when you don’t loan it out to a bankrupt solar company, or blow it on a broken website.
The economic theory that government spending is a driver of prosperity is demonstrably childish. (If it had much truth to it, why aren’t all those third-world socialist countries rolling in cash by now?) Then again: whose prosperity are we really talking about here, New York Times? After all, I guess it’s true that folks like Jonathan Gruber seem to do pretty well when the government gets carefree with our hard earned money.