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.



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52 Comments:

  1. I bet it was a click-o... It's like a type-o...

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  2. Who is the 1 idiot that disliked this?

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  3. We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. -- Winston Churchill (1903)

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  4. We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. -- Winston Churchill (1903)

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  5. We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. – Winston Churchill (1903)

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  6. Ron Paul is a great man i will vote for hem if he run's!

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  7. Then you don't like Ron Paul.

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  8. Then you don't like Ron Paul.

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  9. Ron Paul / Gary Johnson 2012!

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  10. The Ron Paul "Message" is getting some real traction.

    The TEA Partiers are a grass roots wake up call, Americans are becoming aware.

    The real problem is that We The People DON'T TRUST our Government anymore.
    No business person is going to hire people in an economy that continues to contract i.e "deflate".

    Who in his right mind, for that matter even his left mind, would trust this regime to even change a light bulb successfully..

    We MUST get serious about our elections and Ms. Christine O'Donnel has the right message, the people don't want the "Status Quo", the same old Party Machine
    Agendas.

    Please note that Ron Paul and his End the Fed message still gets no traction on Fox News or other conservative stations. SOME ONE needs to bring this to the forefront, and re-introduce the Audit the Fed, but this time get the TEA Party involved to support the "Peoples" interests.

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  11. For some reason I have suddenly reached a VERY profound epiphany. Ron Paul created the Tea Party. The Tea Party has for the most part been hijacked by NeoCons. However, I foresee a total resurgence of the Ron Paul Legion. This may actually propel him to victory if the Fox News sheep are able to be tamed by simple logic. Too bad logic is dead though.

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  12. you are so completely wrong..

    because it's not that there is no easy way out of this...

    it is that there is no way out of this... it's over man, it cannot be saved/changed/restructured.

    YOU'RE FUCKED

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  13. you are so completely wrong..

    because it's not that there is no easy way out of this...

    it is that there is no way out of this... it's over man, it cannot be saved/changed/restructured.

    YOU'RE FUCKED

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  14. I like Ron Paul, but I would have to say that I want the Bush tax cuts to expire.
    Why?

    Because we have a huge national debt and there is no easy way out. Of course it's a bit painful to have higher taxes, but this problem can't be solved painlessly. We got into this mess, we have to pay for it. Pay off the debt first, then decrease taxes.

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  15. Ron Paul is the man!

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  16. ron paul, you need to remind the person running the alex jones channel that censorship of any free speech is unconstitutional! my sarcastic comment was removed and i was blocked for something i said. you should remind them that the worst kind of speech should be the most protected. they are censoring comments they don't like over there. censorship is the wrong course of action, DAVE. counter speech with speech not censorship! i thought alex jones was against censorship and for freedom of speech!

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  17. boooooooo

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  18. Yeah he's gonna run but wait until they run him out of the elections like they did last election. But Jesse Ventura wouldn't be a great running mate.

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  19. Yeah he's gonna run but wait until they run him out of the elections like they did last election. But Jesse Ventura wouldn't be a great running mate.

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  20. How about "Vote for Ron Paul and he will make sure Oprah stays on tv for another season"?

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