Readers of the Los Angeles Times were shocked last Friday [January 30, 2009] by a full-page ad appearing on page A-10. The CATO Institute had the audacity to challenge President Obama’s assertion that government intervention is essential if the American economy is to recover. The ad was signed by over 200 economists, and the page contained the following message:
“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 Keynesians and that we all support a big increase in the burden of government, we the undersigned 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, policymakers 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.”
The signatures follow, consuming about two-thirds of the page.
Assuming that the CATO people are correct, American taxpayers may find themselves on the hook for two to three trillion dollars spent without economic benefit. By the end of President Obama’s first term, the national debt will likely be approaching $15 trillion, nearly three-quarters of America’s current annual GDP. Such colossal waste will place the American economy in jeopardy for decades to come just as Medicare and social security obligations begin to add enormous yearly expenditures, amounts that eventually will dwarf even these mind-numbing stimulus figures.
In preparation for the coming fiscal crunch, lawmakers should begin now to reform our entitlement programs and pare back the size and scope of government. However, President Obama’s stimulus bill shows no signs of honestly dealing with future realities. As more details emerge, it is becoming clear that too much of the stimulus is nothing more than political payback and liberal wish fulfillment.
A friend of mine, someone without deep political convictions, recently urged me to “give Obama a chance.” Such a naive approach, blind to historical, fiscal, and political substance, may be exactly what our new President is counting on to get his package through Congress. Republican Senators will find themselves under compelling pressure to not appear ideological when practical expediency is the order of the day. Although we can safely assume most Republican lawmakers agree with the CATO statement, many may be looking ahead to the next election cycle. However, as it stands now, the Democrats cannot break a filibuster, so Republicans can stand on principle if they have the courage of their convictions.
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Information on the CATO Institute from its website www.cato.org:
About Cato
The Cato Institute was founded in 1977 by Edward H. Crane. It is a non-profit public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato’s Letters, a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution.
Cato’s Mission
The mission of the Cato Institute is to increase the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace. The Institute will use the most effective means to originate, advocate, promote, and disseminate applicable policy proposals that create free, open, and civil societies in the United States and throughout the world.
Posted by Jerry Pomeroy in Economics, Government Waste, Limiting Government, Obama Presidency