President Obama and the Democratic Congress forced through a $787 billion stimulus package to create jobs and try to give a jump start to the economy. Instead, the nation’s unemployment rate hit 10.2 percent and continues to rise. Despite the clear failure of the government’s massive deficit spending, House Democrats are planning a second so-called stimulus that promises to do even more economic harm.
Speaker Nancy Pelosi plans to move a package by Christmas that will extend expiring unemployment benefits and approve more highway and infrastructure spending as a gambit to create jobs. It won’t work. This merely robs money from the private sector to pay for the make-work whims of lawmakers and bureaucrats, which undercuts job retention and creation by private firms that in general are more efficient than government.
In October alone, the number of unemployed Americans increased by 558,000 to 15.7 million, according to the Bureau of Labor Statistics. That huge mass doesn’t include those who have stopped looking for work. Despite the evidence, the White House continues to estimate that 640,000 jobs have been “created or saved” since the stimulus was put in place. The administration’s math is overstated even by its own accounts. The Recovery.org Web site, which is supposed to track the impact of stimulus spending, has reported nonexisting congressional districts in all 50 states that purportedly received more than $6.4 billion in stimulus funds that “created” thousands of phantom jobs.
Democrats are giving lip service to various ways to pay for this new bureaucratic largess to avoid making the deficit even larger, but the options are neither convincing nor promising. Instead of cutting other government spending to cover the new tab, some Democrats are pushing tax increases or the use of leftover financial-sector bailout money, the latter of which is deficit spending but - the argument goes - not so bad because it was already approved.
A misguided proposal from liberal Democrats and the AFL-CIO would tax Wall Street transactions - including stock trades and future swaps - to pay for a new spending package. In our globalized economy, trading can be done anywhere. If enacted, this plan would undercut profits in the U.S. financial services industry by pushing traders offshore to avoid taxation.
More spending and more taxes won’t spark an economic turnaround. The last spending spree of nearly a trillion dollars couldn’t prevent unemployment from racing past 1 in 10. More spending and more taxes will simply result in more of the same: more unemployed.