More Fiscal Wizardry

Well here is looking into the crystal ball with an Obama Presidency and Liberal controlled Congress.

After consulting with Barack Obama, Democratic leaders are likely to call Congress back to work after the election in hopes of passing legislation that would include extended jobless benefits, money for food stamps and possibly a tax rebate, officials said Saturday.

The bill's total cost could reach $150 billion, these officials said.[1]

As pointed out SEVERAL times before, this money is not free. It is a long term loan that we have to pay back. So, let's spend more money in the wake of this. And of course nothing about spurring investment or creating more private sector jobs. No we will give you infrastructure projects paid for by the government. I am sure all of you getting ready to graduate college are happy to hear after four years of college you are now qualified to swing a hammer. This is not 1933 and we don't need a New Deal solution, it didn't work anyway.

The federal budget deficit hit a new record in the just-completed 2008 budget year under the latest estimates from the Congressional Budget Office.

The record $438 billion for the budget year that ended last week is up from $162 billion posted last year. The previous record of $413 billion was posted in 2004. [2]

Yeah these are the geniuses that are bringing change and reform to Washington. In reality the only change they are making is breaking us worse. But don't worry there is always this to consider.

The deficit is virtually certain to balloon even higher next year as the government sorts out the financial crisis and taps a $700 billion Treasury fund to buy toxic mortgage-related securities.[2]

Right now there is a lot of debate as to what to do about our economic crisis and Liberals have been fond of bringing up the New Deal as the hope to solve all of our problems. Try again, there were some factors they are leaving out. The first is the massive increase in industrialization as a result

The Depression continued with decreasing effect until the U.S. entered the Second World War. Under the special circumstances of war mobilization, massive war spending doubled the GNP ; Civilian unemployment was reduced from 14% in 1940 to less than 2% in 1943 as the labor force grew by ten million. [3]

Secondly, believe it or not it was Roosevelt's impressive attempts at fiscal conservatism.

Fiscal conservatism was a key component of the New Deal, as Zelizer (2000) proves. It was supported by Wall Street and local investors and most of the business community; mainstream academic economists believed in it, as apparently did the majority of the public.[3]

Of course I am not suggesting let's go out and start a war or increase the spending. It is counter intuitive to suggest that the solutions are not opposites. But taking a Burkean approach to learning from history you can look at this and be pragmatic about it. If the government is going to get involved in the private sector do so in a fashion that is going to re-industrialize this nation, simple infrastructure projects are not going to cut it. Nor is handing out money to financial institutions. Could you imagine what private industrial firms could do with $700 billion dollars of venture capital? Secondly, we have got to stop spending our way into oblivion, this is beyond ridiculous.

The Liberals, meaning the Repubs also, only grab the plays out of the playbook they like and ignore the other factors involved. Free market did not get us here. Out of control spending, greed, and inane regulatory laws did and that is the fact.

-OP

[1] Tax rebate, food stamp money possible in aid plan
[2] Budget deficit hits record $438 billion, CBO says
[3] New Deal