August 4, 2011 by David K. Sutton
Bad Ideas Die Hard
As the economy increasingly begins to resemble the scene pictured below from Live Free or Die Hard (2007) we still have persistent calls for incredibly stupid ideas on how to fix the economy. Republicans in congress led the charge with stupid ideas and many Democrats appear to be complicit in the madness.
The idea that — cutting government spending by getting the government “out of the way” and reducing its size and power will lead to economic growth — is borderline insanity. An ideology of many elected officials in Washington posits the only way to improve the economy is to reduce regulation and decrease taxes. They say if government would remove the shackles chaining big business down the economy would take off. The problem with all of this is that it’s completely contrary to history. By any measure there is less oversight and less regulation of big business now than at any other time in U.S. history. At the same time we have some of the lowest taxes we’ve seen in this country in at least the last 50 years.
The reality is that the greatest tool that government has to increase economic activity is targeted spending in areas that will benefit the nation for many decades to come. One important area of spending that is desperately needed is infrastructure, or in other words, repairing our roads and bridges, some of which are in horrible condition. I recognize this nation has a huge deficit and long term debt but reducing government spending in a weak economy only leads to one place, an even worse economy. When the economy is weak that is when government should run a deficit. It should run a deficit for the purpose of stimulating economic activity and creating jobs. Once the economy recovers and is strong, then (and only then) is it a good idea to reduce spending to tackle the deficit and long term debt.
