Does Bogus Rhyme With Stimulus?

As Obama and the new Congress roll towards a trillion dollar stimulus package, it's time to take a look at the concept of the government use of a "stimulus" to boost the economy.

The general idea underlying this idea is that fiscal policy can be used in a recession to stimulate economic activity. But there's a problem with how it's applied.

You see, if you're going to use fiscal policy as a stimulus when the economy is weak, you should also do the opposite when it's strong. Thus, if increased spending is sound economic policy now, then decreased spending was appropriate before we got into trouble.

But that ain't what happened. When the economy is booming, then that itself is used as a justification for more spending and tax cuts as well. During times of economic growth, tax revenues increase because of all the economic activity. Politicians see this as an opportunity to hand out candy to constituents.

Whatever the economic situation, you can count on Washington (and other levels of government) to come up with rationalizations for more spending.

Voters should always demand candidates answer the tough questions:

Where is the money coming from?
Are you going to raise my taxes?
Are you going to cut spending somewhere else?
Are you going to borrow from our children?
Are you just going to print money and if so, won't that increase inflation?

Let's see them answer questions like that.

Fred Ex and the Problem with John McCain

The Wall Street Journal has a great article this morning about Fred Smith of FedEx, the economy, and John McCain. Smith supports McCain because of four key issues: trade, taxes, energy and health care. I don't trust McCain on the biggest issue -- spending.

Fred Smith is one of the great heroes of the modern US economy. He founded and still runs Federal Express, a company that underpins everything that makes our economy work. I like the post office, and especially our mail carrier, but when my office has to get something somewhere fast, we FedEx it.

In the article Smith makes some great points about how current US economic policies hurt business and stop them from creating more jobs. Taxes on capital discourage companies from investing. More investment makes labor more productive, and that allows companies to pay their employees more - and yes, to make more profits too.

But when Smith turns this to say that it makes McCain the better candidate for president, I disagree. Obama and McCain will both be bad for the economy. Republican stumpers insist that Democrats will spend too much money and raise taxes too much, increase trade barriers, etc.

Excuse me? Republicans had control under George W. Bush. We had the President, the Senate and the House. And we blew it!

Clinton's last budget (for fiscal year 2001) had spending of $1.8 trillion. Bush's last budget (for 2009) will have $3.2 billion in spending - and that doesn't include the bailout spending. He may very well have doubled federal spending in only 8 years. That's an average increase of 9% a year (1.09^8 for you math geeks). How many of you out there are seeing your income/spending going up 9% a year? Thanks a lot W!

Bush imposed tariffs on steel - so much for Republicans and free trade. I didn't see the Republican-controlled Congress - or John McCain - doing anything to overturn that.

So let's get real. Democrats spend our money and tax us now. Republicans spend our money and borrow so that either we'll pay for it later or our kids will. Neither party is fiscally responsible.

The real problem is not taxes - it's spending. Every voter should challenge every candidate they meet with this. Stop asking them to spend money on your project and start insisting that they cut spending. And demand that they tell you where they'll cut.

If voters took on this mindset - that the biggest questions for candidates should be about where they'll cut spending - then candidates would learn that cutting spending is important.

Cutting spending shouldn't be all that difficult. You can start with my favorite - stop wasting money overseas. Bring the troops home - not just from Iraq but from all over. Let Europe, Japan and South Korea defend themselves. Wealthy countries can take care of themselves. We should defend our borders and that wouldn't cost much if we focus on what's important. Dropping this, these days, will save us close to a trillion dollars a year. That's $3000 per person in America - man, woman and child (including illegal immigrants); or $10,000 per family per year. That's a lot of money folks! While we're at it, let's dump foreign aid. It never goes to the right places anyway. Decades of throwing money at this and - gee whiz - kids are still starving in Africa.

Then you've got immigration and our borders. We should focus on stopping terrorists and criminals from entering. And we should let in people who want to work. That's good for the economy. Not letting workers in hurts US businesses and shifts jobs overseas. Building a 700 mile long fence is one of the dumbest wastes of money ever. We could easily save $100 billion a year plus more immigration would boost our economy.

Then there's agriculture. We spend hundreds of billions of dollars to help farmers. Farmers? Farmers are people who own large amounts of land. They are rich. Sure they dress in overalls and drive beat-up looking pickups for work. But they own hundreds of acres of land. So we are taxing middle-class workers (and rich ones) and borrowing money from our kids so we can give money to rich people. I need a Carlos Mencia sound effect here.

Then you've got the war on drugs. Look ... most people have figured out by now that prohibition ain't working so good. How many people think that a million marijuana arrests a year are good for the economy or doing anything for society? It does make me money, as a criminal defense lawyer. And sure it creates lots of work for cops, judges and jail guards and such. But maybe if we dropped the dumb drug war the cops would have time to focus on domestic violence, child predators (the real ones, not the 19 year olds hitting on 16 year olds, okay?), and burglars. You know they don't even investigate burglaries any more.

So I'll believe in John McCain when he tells me how he's going to get the budget back under $2 trillion, and when he gets the Republican candidates for Congress and the Senate on board. In the meantime I'll figure they're just as good at wasting our money as Obama and the Democrats, and I'll keep voting for libertarians at every opportunity. Now how do we get John Stossel to run for president in 2012?

Guilderland NY - Reckless Spending

Just a brief update on what's going on in Guilderland NY and with the town government. There has been a flurry of activity in the Altamont Enterprise, with letters going back and forth. Mike Ricard is trying to divert attention from his own failings and is hiding behind the assessor.

More interesting are some numbers I recently got. Here's some statistics on spending by local town governments:




So Guilderland spending has increased far more than other towns in the area since 1999, and property taxes have gone up. That's not the story we've been getting from Town Hall.