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As Long as We Remember...

January 28, 2009

The 2009 Intergenerational Theft Act

Kevin E. Dayhoff

As you read this column Congress is attempting to put the finishing touches on an $825 billion economic stimulus package – otherwise known as the 2009 Intergenerational Theft Act.


Mounting criticism, which is falling on the deaf ears of the Democratic Party leadership, President Barack Obama and his administration officials, is that the only thing it will stimulate is a staggering national debt which will cripple the nation for generations to come.


According to a recent DC Examiner editorial, the Heritage Foundation has calculated that “passing the stimulus bill will increase the national debt to $14 trillion, or 95 percent of the nation’s entire annual GDP, in FY 2010.”


“Since the first ‘stimulus’ package, signed last year by former President George W. Bush, obviously didn’t work (if it did, we wouldn’t need another one), putting American taxpayers even more in hock seems like a very bad idea.”


To make matters worse mounting evidence indicates that this latest theft from our children and grandchildren will not work to do anything for the economy except prove to be a boondoggle for every pet public policy project for which the Democrats have craved for years.


David Rogers, writing for Politico on Monday, observed that the Congressional Budget Office has said “that a Democratic-backed stimulus bill will have a ‘noticeable impact’ on growth and unemployment in the next few years but could prove less than the quick jolt that President Obama is seeking…


“By CBO’s count, only two-thirds, or about $525.7 billion of the package, will make itself felt in the economy over the first 18-19 months, considerably less than the 75% rate promised by the Obama administration. Moreover, CBO suggests that the sudden flood of new appropriations could prove counter-productive, overwhelming agencies, state and local governments and leading to more delays.”


Of course, the one solution for that is for the government to hire more bureaucrats. However, contrary to the prevailing wisdom of the Democratic Party leadership; we cannot get ourselves out of this mess by having the government employ all of America.


Throughout history, recessions have come and gone. It would be great if we could learn from our nation’s past mistakes.


Unfortunately, the elite media and the Democratic Party leadership would have you believe that the economic challenges of the Great Depression in the 1930s were solved by President Franklin Delano Roosevelt’s New Deal.


Rest assured that the New Deal is not considered successful by many economic historians. It was relatively accepted that increased spending in the military and industrial complex, as a result of World War II, was the awkward remedy to the Great Depression.


A DC Examiner editorial from last fall reiterated the fact that President Roosevelt’s excessively pro-labor, anti-competitive New Deal and social-welfare programs actually prolonged the Great Depression by seven long years.


The editorial called to our attention “a groundbreaking study” by UCLA economists Harold Cole and Lee Ohanian. They used 1929 data to calculate “what wages and prices would have been without the New Deal, and then compared them to actual wages and prices at the time.


“Their findings were startling: In 11 key industries, actual wages averaged 25 percent higher than market conditions warranted, but unemployment was also 25 percent higher as well. Meanwhile, the New Deal pushed up prices 23 percent higher than they should have been, so consumers couldn’t afford to buy, leading to even more unemployment.


“Cole and Ohanian blame FDR’s National Industrial Recovery Act for ‘short-circuiting the market’s self-correcting forces.’ Instead of stimulating the economy, they argue, FDR managed to depress it even further. Without government intervention, the Great Depression would have ended in 1936 instead of 1943.”


The current economic stimulus package is a modern-day version of the National Industrial Recovery Act with an added overspending component.


More often that not, throughout history, the voters have responded to downturns in the economy by removing the political leadership that played a role in causing the economic adjustments.


Peculiar to the economic panic of 2008 is that the very same congressional leadership that played a significant role in causing our current problems is still in power. If that were not enough, that same leadership is assuming the task of rectifying the very public policies that contributed to the current mess by giving steroids to those very same policies of counterproductive, anti-competitive overregulation and overspending.


It should be also noted that President Bush certainly played a role with his spending practices and failure to wield the veto pen at various moments during his tenure in office.


Of course, the question in the back of the minds of anyone who knows anything about economics is where is this money going to come from and how in the world is it ever going to be repaid.


The recent DC Examiner editorial dares to ask: “Where will the $825 billion come from? Since government produces no wealth, there are only three options: Take it out of the already floundering economy by raising taxes; inflate the currency (which is just an indirect tax); or borrow it and pump up the national debt. All three alternatives bode ill for American prosperity.”


The bulk of the solution to our current economic woes is to cut taxes and return the money, which would otherwise fill the government coffers, to the private sector where it would be put to productive use.


One of the severe challenges caused by the revisionist versions of history that result when it is subjected to populist interpretations in the pursuit of expediting a partisan political agenda is that we are doomed to repeat what really happened.


Our nation’s future is being threatened by politicians who cannot see beyond their immediate political gain and the next several generations will be doomed to pay for it and suffer the consequences.


Kevin Dayhoff writes from Westminster: E-mail him

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