Hope and Change Pain
It is obvious to everybody that President Obama’s handling of the economy leaves much to be desired. With monetary giveaways to any company with their handout, our “investment” in the auto industry, and record deficits on the way, Obama’s fiscal policy seems more like a call for the limbo than it is a plan for fiscal recovery.
Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.
His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.
There are “troubling similarities” between the US President’s actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.
In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.
The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: “[Franklin D Roosevelt’s] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows.”
Well, that’s a cheery way to spend your Labor Day. But I think it is incredibly illustrative of the arguments being put forth not just in Washington but also in Annapolis. Both Obama and O’Malley are hellbent on trying to spend our way to fiscal prosperity while, at the same time, making it harder and harder for middle and working class families to compete on a level paying field. Both the President and the Governor are taking us on a reckless fiscal course that will lead to higher deficits at the national level, long-term inflation, and a reduction in earnings and income for most Marylanders.
At the Maryland level, this is a particularly damning problem. With our state Constitution requiring balanced budgets, it is painfully obvious to everybody the danger that comes with proposed overspending. When you combine liberal belief in the myth that Maryland has a recession proof economy with a senseless devotion to Keynes, you wind up with a hyper-bloated state budget that requires piecemeal cuts. And Governor O’Malley, instead of showing leadership and reducing state spending and the size of state government, instead tries to finagle his way out of it.
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In short, the fiscal policies of Barack Obama and Martin O’Malley are not sustainable, will cause more and more pain for middle and working class Marylanders and are designed to avoid the tough choices that these leaders need to be making.
On this Labor Day, I challenge Maryland’s leaders at the federal and state level to figure out how exactly they are going to make life more affordable for Maryland’s middle and working class families. Your reckless fiscal positions have gotten us to this point; so how do you plan on fixing it?