There is too much worry about the size of government, and too little appreciation for how stimulus spending has helped stabilize the economy and how more of the right kind of government spending could boost job creation and economic growth.
That right there demonstrates a lack of knowledge of the basics of economics, unless you're steeped in the idea that government is the sole arbiter and controller of the economy, something that just isn't true. Perhaps we'd appreciate the stimulus a bit more if we didn't see record unemployment, a declining GDP (revised downward again last week from the already anemic second quarter numbers), a giant trade deficit and a nation drowning in unsustainable debt that's sucking all the oxygen from the recovery along with much needed capital.
The simple truth is this: Government spending doesn't create viable, long term employment and the $787B spent by the Stimulus bill is ample proof of that. A year later, our economic problems have yet to improve, indeed, by all the traditional measures, things have gotten much worse.
The good professor lacks another fact of economic reality: government is an economic leech, sucking the blood of the host economy. It is for this once-well-recognized reason that our Founders sought to wisely limit the power and scope of government. Government cannot produce one penny of revenue - it can only take from the private sector.
Never one to let facts get in the way of a false economic argument, she proceeds,
The conventional wisdom about the stimulus package is wrong: it has not failed. It is working as intended. Its spending increases and tax cuts have boosted demand and added about three million more jobs than the economy otherwise would have. Without it, the unemployment rate would be about 11.5 percent. Because about 36 percent of the money remains to be spent, more jobs will be created — about 500,000 by the end of the year.Hmmm. Working as intended? Really? See the third paragraph above. Please don't make me cut and paste that here. The conventional wisdom is based on something you haven't heard of called "results". It's how the rest of us evaluate our actions out here in the real world. We're funny like that. And while you're at it, please peer into your crystal ball and tell me what the next numbers are for Lotto.
But wait! There's more!
Federal aid to the states is especially important because they finance education. Although the jobs crisis is primarily a crisis of demand, it also reflects a mismatch between the education of the work force and the education required for jobs in today’s economy. Consider how the unemployment rate varies by education level: it’s more than 14 percent for those without a high school degree, under 10 percent for those with one, only about 5 percent for those with a college degree and even lower for those with advanced degrees. The supply of college graduates is not keeping pace with demand. Therefore, more investment in education could reduce both the cyclical unemployment rate, as more Americans stay in school, and the structural unemployment rate, as they graduate into the job market.Oh, there's a crisis of demand, all right. Unemployed Americans are demanding jobs, the problem is with a Washington full of people who don't know how they're created. And your correlation between education and job security is grossly incorrect: many of the unemployed are college trained. However, in the generation that preceded this one, a college degree wasn't necessary for a good paying job in an interesting field of endeavor. I'm speaking of the manufacturing sector, something our government has sought to eliminate. Thanks.
An increase in government investment in roads, airports and other kinds of public infrastructure would be cost-effective, too, as measured by the number of jobs created per dollar of spending. And it would help reduce the road congestion, airport delays and freight bottlenecks that reduce productivity and make the United States a less attractive place to do business.Do you "invest" in gasoline, or do you buy it because your vehicle won't run without it? Allow me to inform you: tax expenditures are not "investments". When the economy is performing as it should, there is more than enough tax money to pay for the required maintenance of public infrastructure. The money must be spent to keep the infrastructure in safe operating order. And here's the other thing: the US is a less attractive place to do business due to the increasing costs of compliance with federal regulations, rules and red tape, not road or airport congestion as you suggest. These days, massive pensions paid to unionized public workers is the biggest drain on local coffers. That's where our maintenance money is going.
The federal government should also create and capitalize a National Infrastructure Bank that would provide greater certainty about the level of infrastructure financing over several years, select projects based on rigorous cost-benefit analysis, invest in things like interstate high-speed rail that require coordination among states and attract private co-investors in projects like toll roads and airports that generate dedicated future revenue streams.
Um, no it shouldn't. We have no need for that. In fact, the best and most efficient answer to our economic woes would be for the government to stay out of the economy as much as possible, except to enforce current laws (I'm referring to the ones that actually make sense, which the recently passed Financial Regulatory bill doesn't do). There is also no need for an interstate high-speed rail system, nor is there even a need for an intrastate one such as the one planned in Florida. Please explain to me why we would want to spend billions on a transportation system that moves people more slowly than aircraft.
Again, if folks like this have the President's ear and are giving him economic advice, then we are well and truly screwed.