I've had this discussion with a few people, including my good friend Danny, and keep coming back to the point that spending more money has not yet helped in times of economic crisis. Bush shouldn't have thrown money at the problem with his "economic stimulus plan", no bailout has helped, and now our leaders are trying to pass a plan to spend, at the moment, $800 billion. That will surely rise to over $1 trillion after everyone get their say, their earmarks, their pork.
I still don't understand why the President's (any President) economic advisers are given more weight that Nobel Prize winners, active researchers, and other leading economists who have no party affiliation and no reason to spread doom and gloom.
More money hasn't yet fixed the problem. Not now, not during the Great Depression, not during the Panic of 1893. We need smart, efficient spending, tax cuts, regulation reform/scaling back, and we need businesses who made poor decisions to be allowed to fail.
CATO took out this ad yesterday and I thought it was pretty interesting. Click the link to see the 200 signatures of economists who signed the petition.
Fiscal Reality Central.
"There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy."— PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009
With all due respect Mr. President, that is not true.Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.