The most up-to-date U.S. unemployment number just came out last Friday. Unemployment ROSE to 8.3%. And of course the TRUE unemployment rate is closer to double that when you consider formerly full-time workers who are now working only part-time, under-employed workers, and those who’ve been so discouraged with the scarcity of available jobs that they’ve dropped out of the workforce altogether.
Obama’s answer to the weak economy was of course an $868 billion Stimulus package that virtually everyone now agrees didn’t work. However, some of President Obama’s most ardent supporters, like liberal economists Robert Reich and Paul Krugman, argue that the problem was that the huge Stimulus – wasn’t huge enough! And in fact, the only thing which will bail the American economy out is – another stimulus – a Stimulus II.
That’s what President Obama wants too. However, he’s afraid to call it another stimulus bill, (because that term is now so discredited) so he calls it his “jobs bill.” Republicans in the House (like myself) have said “no way.” We can’t afford it. The debt built up under Obama’s policies is going to bankrupt the country, and another stimulus wouldn’t work any better than the first one did.
Obama’s response is that we have a do-nothing Congress. Voila, gridlock.
Well, let me recommend an op-ed, which appeared in the Wall Street Journal two days ago, Monday, August 6th, by Arthur B. Laffer. Mr. Laffer is a world-renowned conservative economist, educated at Yale and Stanford, a former member of President Ronald Reagan’s Economic Policy Advisory Council, who is probably best known as the “father of supply-side economics.”
The gist of Mr. Laffer’s op-ed is that the last thing we should do, is pass another stimulus package, and that it would be a total waste of money. He offers as proof a study done of the 34 nations which make up the Organization for Economic Cooperation and Development (the U.S. is one of the 34 nations.) According to the study, the four countries that increased government spending the most between 2007 and 2009 (Ireland, Finland, Estonia, and the Slovak Republic) had the worst rates of GDP growth of any of the 34 countries. And of course GDP growth is critical to job growth.
According to Laffer, the reason is that for every additional government dollar that is spent, there is a corresponding dollar that is NOT spent in the private sector. “In reality, every dollar of public-sector spending on stimulus simply wiped out a dollar of private investment and output, resulting in an overall decline in GDP.” He concludes the op-ed by stating:
I have to say, I agree with Laffer, and I disagree with Obama apologists like Robert Reich and Paul Krugman.
The American people will decide in a few short months, in which direction we as a nation will proceed. It’s important that they get it right.