and the
Citizens Economic Research Foundation

Barbara's Column

President's plan will only make things worse
by Barbara Anderson

The Salem News
Saturday, February 14, 2009

I'd like to take a break from politics and do something light about Valentine's Day, or Presidents Day, or maybe a "coming of age" column about my birthday next week.

Then I read that women are dreaming about having sex with Barack Obama, and imagined St. Valentine rolling over in his grave.

I'm told I should honor Washington and Lincoln by buying a new car on Monday to stimulate the economy. Swell, now I'm unpatriotic because I don't want a new car.

As for my birthday: I'm just grateful that I have finally reached full retirement age so that I don't need to work in an economy that is falling apart.

Still, like a good citizen, I called Sen. Kerry's Washington office, but no one answered the phone. So I called his Massachusetts office, and the young man there seemed surprised when I asked to be recorded as opposed. I heard that calls are running 100-1 against the plan, but maybe that doesn't include calls to Massachusetts senators, who consistently win re-election despite Kerry's longtime opposition to a balanced budget amendment, and Ted Kennedy's determination to nationalize our health care. Why would we expect them to have a rational position on economic stimulus?

Actually, I'm not sure what a rational position on economic stimulus looks like.

There's the Democratic position using Keynesian economics: Just have the government spend a lot of money, on anything, doesn't matter what, even if the government doesn't have the money and has to either take more from us so we can't spend it ourselves or borrow it from other countries who no longer have it to lend.

Or, an alternate plan: Have the government print some new money and spend it, on anything, doesn't matter what, causing the play dollars to drive down the value of the real thing so we'll need a lot more of it to stay even.

The Republican position of cutting taxes makes sense if the tax cuts increase revenues beyond their own value, the way capital gains tax cuts once did by encouraging investment. Otherwise, the government just adds to the deficit, which raises taxes on our grandchildren.

It's swell to cut the payroll tax, but aren't payroll taxes supposed to be paying for Social Security, which is already due to run out of money in 2041? Nice to see politicians finally admit that payroll taxes are just part of the revenue stream, spent on other government stuff.

On the other hand, I don't get the argument that tax cuts won't help because taxpayers will use the money to pay down debt or just save it instead of spending it. Isn't consumer debt part of the problem? Don't banks lend our savings to people who want to spend? Should people, like the government, just spend money on anything, doesn't matter what? Then fine, give me a tax cut and I'll buy something made in China so that country can lend more to our government to cover the next bailout.

But if we don't want to "waste" the stimulus money on taxpayers, why does the plan give an earned income tax credit to people who don't even pay income taxes? (To spend on anything, doesn't matter what.)

The one idea that would make sense if the government had the money, which it doesn't would be repairing and maintaining existing infrastructure, which the government should have been doing all along. Building new stuff that won't be maintained, with money the government doesn't have, is only slightly better than paying workers to dig holes, then fill them in again, just to stay employed.

If the government gives money it doesn't have to people for the specific purpose of buying homes and cars or college classes, doesn't that just give sellers an incentive to increase the price those consumers will have to pay?

Then President Obama said last month, "There is no disagreement that we need action by our government, a recovery plan that will help to jump-start the economy." But in several major newspapers, including Monday's Boston Globe, there was a full-page ad paid for by the CATO Institute and signed by economists from across the country who disagreed.

"With all due respect, Mr. President, that is not true," they wrote. "We the undersigned do not believe that more government spending is a way to improve economic performance."

So President Obama went back into campaign mode, pitching his plan in Elkhart, Ind., then returned to Washington for a televised evening news conference. As reporters asked tough questions, he just kept talking, the way people do when they don't know what they're talking about, but figure they'll eventually hit on something that sounds right.

If the president's major asset was that he is "calm and mature," he now needs a new major asset. And the nation needs an economic reality check.

The United States has a national debt of $10.7 trillion. This year's deficit will add $1.2 trillion. Social Security and Medicare are heading for bankruptcy. President Obama is right about one thing a catastrophe looms. His panicky "economic stimulus plan" will only make it worse.

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle Tribune newspapers; bi-weekly in the Tinytown Gazette; and occasionally in the Lowell Sun, Providence (RI) Journal and other newspapers.