The United States Congress, in tandem with the United States President, is about to flush another $160 billion down the federal toilet. Instead of honoring their oaths of office and crafting real budgetary reform, designed to avoid ever encountering the River Styx, these floundering self-seeking politicians are throwing yet another meaty bone to the electoral Cerberus.
A temporary payroll cut will do nothing whatsoever to leverage the United States economy into full recovery. Econometric results clearly indicate that only changes in permanent income generate consumption increases. Temporary increases in income typically are saved. Absent the consumption boost, new jobs will not appear. Instead, the deepened long-term fiscal crisis serves to deter private investment, especially among upstart firms. And that is where economic recovery is always generated.
Medicare is already close to crisis and fundamental reforms are essential if the system is to be rendered viable as the baby-boom generation access its resources. A one-year fix for doctor’s medicare services futilely attempts to paper over the hole in the funding dyke with rolled up toilet paper. Extending unemployment benefits is a job destroyer that reduces incentives to search for jobs while further crowding out private investment.
It is a sad commentary on a presidential democracy that the entire political system freezes over during the final year of a failed president’s selfish scramble to hold on to an office that he observably cannot handle. Winston Churchill may well have spoken too soon when he commented that ‘democracy is the worst political system conceivable, except for all the other alternatives.’ No doubt, Winston could not conceive of a situation where someone as incompetent and as intellectually lazy as Barack Obama would ever be freely voted into the Presidency of the United States.
Tags: another wasteful stimulus, Milton Friedman, permanent income hypothesis, politics trumps national interest
Charles Rowley's Blog 
Leave a comment