Stimulus #2: A Bailout for the Public Sector?

Date: 09/13/2010

On More Stimulus Spending

by Ron Paul

Faced with continuing economic decline and an impending election, the administration, predictably, is entertaining the idea of another stimulus package. To explain why the last one didn’t work, adherents to the Keynesian economic philosophy are claiming that they actually did work – it just looks like they didn’t because we don’t realize how much worse off we would be right now without trillions of dollars of public spending. The last administration bought into Keynesianism just as much as this one does, unfortunately. Until we have leaders who understand that debt is not the way to prosperity, there will be no stopping runaway government spending.

While it is nice to hear about business tax breaks, the positive results of these tax cuts will be dwarfed by its negative effects. First of all, $200 billion or so in temporary tax cuts and credits to businesses are nothing compared to the $3.8 trillion in tax hikes that will hit the economy like a ton of bricks on January 1, 2011 if the Bush tax cuts are not extended by Congress.

Second of all, businesses are reluctant to hire and invest, not because they are looking for temporary credits, but because of future uncertainty; they simply don’t know what the government is going to do next and how future government policies will affect decisions they make now. What new costs and regulations will be placed on them with healthcare reform and financial services reform? Will Congress convene a lame-duck session this winter to pass cap-and-trade and other destructive legislation? What will the cost of compliance be for hiring new employees, and will that force them to simply lay off anyone they hire now? Worse, will the government come up with fines or additional costs if businesses have to lay people off in the future? Right now, the safest thing for businesses to do is nothing. Until we regain respect for the rule of law and remove some of this uncertainty, I’m afraid none of these temporary promises, made right before an election, will do much towards any economic improvement.

The other glaring problem with this proposed stimulus package is that it couples tax cuts with spending increases, which makes no sense when we are already heavily indebted to foreign countries. We should be cutting taxes and slashing government spending dramatically. The private sector simply cannot bear the burden of our engorged public sector. In fact, one reason earlier stimulus programs did not result in any private sector growth is because large amounts went to the public sector. Indeed, the spending that the administration is now proposing arguably constitutes a bailout of the public sector and various union allies of the administration.

This administration is falling into the same dangerous trap we fell into during the Great Depression, as did the Germans leading into their hyperinflation of the 1920’s. The temptation is to do something, anything, proactive to attempt to stimulate the economy, but history has shown us that governments cannot spend their way into prosperity. The best thing government could do is get back to its Constitutional limitations and let the economy stabilize, heal and recover without the crushing burden of government holding it back.


  • Beorwulf2008

    This is for Ron Paul peeps only: We need to find out what people are interested in and tie that in with: “did you know that if the Big Government types get ahold of that, they will either over-regulale it or ban it altogether.” People who generally don’t vote do so because they do not believe that their vote counts for anything….But most people do vote when their direct interests are threatened. GOD BLESS RON PAUL AND THE REAL USA!!

  • GB

    Too much Washington, too little capitalism. Could you imagine Henry Ford trying to start his business in 2010?

  • johnsfullofit1776
  • residentzombie

    Gary Johnson is a much more likely VP choice than Ventura. Ventura will repel voters away from Paul with his ‘conspiracy theories’. Plus Ventura has said numerous times he hates the Republican and Democrat monopoly over election debates and will stay as an Independent. Johnson is a fellow libertarian that has name recognition with Republicans.

  • FumingPoliticalPunk

    Let Ron Paul choose his cabinet members people!

  • BeadStallcup

    Ron Paul for US President 2012. Jesse Ventura for VP. Jim Rogers, Peter Schiff and Gerald Celente for his economic advisors.

  • If the economy so good, then why are so many Americans are unemployed or underemployed? We can’t spend our way out of debt, we are an even debtor nation!

    • David

      Good post Bottomline, your not believing the bullshit nor are most other people by now as well.

      This is the state of the United States Economy:

      James McGuire

      MERS is purple ass martian duck walking backwards and wants everybody in the world to believe they are a Swan.

      Worth watching, it is coming ! ! !


      HI James;

      Yeah this is good, it explains in very simple terms what you and Alvie have been working on so hopefully the 65,000,000 homeowners currently facing foreclosure will use it to their advantage. God that’s an enormous percentage of the population, if this figure is based on the actual homes and you figure an average of even two people living in the homes which face foreclosure that puts almost half the American population in risk of being out on the street at this point. It’s absolutely insane that things have been allowed to come to this while at the same time we still have the production capacity to create and abundance beyond what anyone could imagine in our hands today.

      Unfortunately this wouldn’t seem to hurt the banks much as they just wrote the credit they are attempting to foreclose on into existence and they lose nothing even if the homeowners walk away free and clear and we still don’t have the basic means of trade that we need for the economy to function because of them either and as long as they still exist things can only get worse.

      I think we’ve come up with a solution to the economic problem:

      We need everyone who agrees participating in it to make it work though, just check the instructions underneath it as to how.

      Thanks All.

      “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” (Thomas Jefferson, 1743-1826)

      • Besides Government jobs are outgrowing private sector jobs! MERS is incompatent and don’t know what he or she or they are talking about!

  • jx14aby

    This is the only politician who doesn’t make me want to puke.

  • MeatLoafEnchilada

    Ron Paul is my homeboy.

  • mexicantlivehere

    Close your eyes and its like listening to a 1930s radio broadcast lol.

  • PistolPackingPatriot

    If, by some miracle, the puppetmasters would allow Ron to “win,” I wish his first act on day one would be to frigging disappear. Yes, disappear… to that mythical Shangri-La valley in Colorado where all the useful people went in Atlas Shrugged. Just leave me a map before you go, Dr.!

  • jbster7777

    Buy gold it the only true money!

  • legalizeliberty

    Ron Paul / Jake Towne 2012

  • donatefreedom

    Liberty candidate for Congress Jake Towne Money Bomb Sept. 14
    DailyPaul website
    Donate = Freedom!

  • F

    The only way the public can really help, including curbing detrimental behavior, is to have a better idea of the current economy and of the rationale for the economy models and move to be applied.

    1- Money that is collected (from what source), money that is spent (on what), production area and production needed according to current population (number and conditions).

    2-What worked in the past and under what conditions (country and world)

    3- Do any of the above fits to the present and future projections? if not, what modification can be applied that would work.

    I have a hard time believing that there are not enough resources to do the above, both computer and man power to tackle that.

    If the population needs to be of any ‘card carrying’ ideology, or to carry the high tech of today with continuous updates, that would a useful choice to offer: a handy table of the economy status with color coded alerts!

    There are plenty of people in the field to provide us with that, with or without current salary.

  • bloodredskiesx

    oh my god a politician with a brain!

  • Snowflake70

    Remember our roots – – Question Authority – – all authority – question it all the time !

  • kdw



  • egmoney1
  • chuckyoo

    I say, give the money to the tax payers to spend it back into the economy vs. giving it to those that are spending it but holding the money while we plummer further down.