US Economy: Between Barack and a Hard Place

Most TV talking heads have us believing that our short term economic recovery requires us to spend ourselves into financial oblivion. They say that curtailing runaway government spending right now would be repeating the mistake made by the Japanese government in the 1990s, which ultimately caused its economy to flat line into a “lost decade.” The point resonates with many Americans who believe that "you don’t get something for nothing," that there is indeed no "free lunch," and financial sacrifice is the only path to economic salvation. They believe that high (even hyper-) inflation, high taxes, the continued and deep devaluation of the dollar and slow economic growth are merely the penance for our financial sins.

The fact is that the spending spree of the past year has done very little to stimulate our economy. The timely, temporary and targeted stimulus package outlined by economic advisor Larry Summers never actually materialized. Instead, the Obama-blessed Pelosi-Reid $787 billion abomination of gratuitous spending and political pork turned out to be untimely (most of the money still hasn't been spent) and targeted just about everything EXCEPT projects designed to pay immediate economic dividends and put Americans back to work. Besides all the pork, a significant portion of the stimulus money was earmarked to prop up state governments and social welfare programs designed to provide a safety net to Americans in greatest need. Helping Americans in need is a noble cause, but using the money for consumption instead of for investment in America’s business prosperity does not stimulate the economy.

The good news is that if we scrap all that nonsensical spending right now and fund a plan that actually targets stimulating the economy, we may be able to have our cake and eat it too-- a robust recovery in the near term and a chance for long term prosperity. If our political leaders come to their senses and call off the stimulus waste-fest, nix multi-trillion dollar Obamacare and anti-business Cap and Trade, and redirect a fraction of those savings toward creating jobs, we may just start growing again. Robust growth will mean lower deficits, lower deficits will reduce the need for higher taxes and the impetus for high inflation, and just might save the US dollar from near extinction on the world stage. That lunch wouldn't be free, but it would be cheaper and provide leftovers that could be used to fund responsible healthcare reform and other social goodies!