Great Expectations, Disappointing Results
Deficits: The media breathlessly report an "unexpectedly" large increase in unemployment applications with inflation rising "faster than expected." Given the wasteful spending spree we've been on, what do they expect?
The economic gurus at major media outlets such as Reuters are having a dickens of a time explaining why the economy is not responding to the massive doses of monetary steroids we've been injecting.
Last Thursday, after the Labor Department announced that claims for state unemployment benefits increased by 31,000 to 473,000, Reuters reported that the surge was "unexpected." The market, we were told, was looking for 430,000.
We were also told "prices paid at the farm and factory gate rose a faster than expected 1.4% from December after a 0.4% gain in December, as higher gasoline prices and unusually cold temperatures helped boost energy costs." We guess no one expected climate change to be a hoax or lack of drilling to raise prices.
These analysts are shocked - shocked! - that this hopey-changey thing isn't working out. But when you have an economic policy that consists of taking money out of the economy to redistribute, after subtracting government overhead and borrowing the rest from places like China, these numbers should not be "unexpected."
Government has been sucking all the economic oxygen out of the room. The White House announces the establishment of a debt commission led by two retired politicians after submitting a fiscal 2011 budget with a $1.36 trillion dollar shortfall.
Don't we already have a debt commission - called Congress? What did we elect them to do? Isn't it a tad disingenuous to freeze 12% of federal spending after you increased it by 20% across the board your first year?
After the $862 billion stimulus failed to jump-start the economy and create jobs, the question is, why do we keep spending like this? Aside from the crushing debt our children will be burdened with, an ever bigger government will only crowd out the private sector that is the only real hope for genuine recovery.
Remember the triumphant announcement that GDP grew by 5.7% in the fourth quarter? Harm Bandholz, an economist at UniCredit Research in New York, says that "GDP growth is artificially inflated by government stimulus and the inventory cycle rather than driven by final demand, which usually goes hand in hand with an improvement in the labor market."
It's small businesses and risk-taking entrepreneurs who create jobs, not the government. And it is not true, as Vice President Joe Biden once said, that we must keep spending in order to avoid bankruptcy. Eventually, the national credit card must come due.
We do not need a debt commission to tell us not to spend money we don't have. Yet this Congress and this administration unwisely tried to increase spending even more by nationalizing health care and pushing economy-killing cap-and-trade legislation.
The deficit commission, we expect, is merely a cover to raise taxes on the middle class while letting President Obama claim he didn't break his campaign promise. Will the commission recommend extending the Bush tax cuts due to expire this year? Will it recommend returning unspent stimulus funds and paid-back TARP money to the Treasury? We expect not.
We don't need a debt commission to tell us the way to grow is by cutting taxes and spending and creating a degree of certainty so business can plan for the future. The path to prosperity is for government to get out of the way. Otherwise, Democrats themselves will experience greater-than-expected losses in November.
