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President Obama's $50 Billion Road to Ruin

Jennifer Kendall |
September 20, 2010 | 6:19 p.m. PDT

Columnist

President Barack Obama (Creative Commons)
President Barack Obama (Creative Commons)
In 2007, when Nancy Pelosi became the Speaker of the House she said, "Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt." Since then, the deficit has gone from $161 billion to $1.36 trillion.

There’s no blaming this on the wars in Iraq and Afghanistan, either. President Barack Obama's first stimulus bill will cost $100 billion more than the entire Iraq War, according to Randall Hoven’s analysis of the Congressional Budget Office’s information. And now, the President wants to spend another $50 billion dollars to rebuild roads, train tracks and runways. Enough is enough.

President Obama’s $787 billion stimulus failed. Nobody can really argue that anymore. If it had worked, he wouldn’t be proposing another $50 billion for infrastructure spending—which is really just another stimulus hiding behind a new name. The only thing this kind of spending is accomplishing is a one-way ticket to economic crises. It’ is time we learn from mistakes instead of repeating them.

If the government could increase spending in order to expand the economy, then why would they stop at $50 billion for their next stimulus? Why wouldn’t they spend trillions? If increased government spending meant increased wealth in any country, why not borrow and spend all the money we possibly can and watch the country flourish?

Well, there is a reason why: it is because no new income is created when the government borrows and spends money. Brian Riedl said it best in an article he wrote for the National Review Online when he said, “Removing water from one end of a swimming pool and dumping it in the other end will not raise the overall water level.”

And when the government spends money to create new jobs, they are creating government jobs. Government jobs are paid for by tax dollars, but the tax base only increases when private sector jobs are created. In order to increase the tax base we need to create more private sector jobs. Conversely, when unemployment is rising we have a smaller tax base. Starting to see a pattern? Government jobs add to the debt because they are jobs that government is taking from the private sector and yet the private sector is supporting them. It is not sustainable, but it gives the illusion that unemployment is decreasing for a short time.

This illusion is exactly what Democrats are hoping for right now when so many of their jobs are currently on the line. In reality, it is like sticking a band-aid on a bullet wound.

The government spent a total of $3.52 trillion in Obama’s first year in office alone. This kind of spending is going to have serious implications. As The Congressional Budget Office explained, “continually mounting debt would have several negative economic consequences for the United States.” This could cause a gradual or a sudden rise in interest rates, and, if the dollar gets weak enough, it could collapse.

In order to fix this economy before we have a sudden fiscal crisis we need to do the opposite of what has been proposed. We need to stop spending. We need to cut marginal taxes and encourage saving, spending, and investing in the private sector. The “tax the rich” philosophy will not work because it takes money from the very people that create jobs. It is impossible to increase the work force by taking from those who do the hiring. We need to grow the private sector, thereby increasing the overall tax base. Tax cuts, reduced regulation, and incentives for private businesses to expand are the only way to get out of this mess. And if we don’t get out of this mess soon, get ready for complete chaos.

Reach Columnist Jennifer Kendall here.

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