Vote Buying Masquerades as Economic Stimulus

Vote Buying Masquerades as Economic Stimulus by Mark Luedtke At an event to celebrate the life and work of Milton Friedman on his 90th birthday, then Federal Reserve governor and current Fed Chairman Ben Bernanke validated Friedman's ground-breaking work analyzing the cause of the Great Depression by saying, "You're right, we did it. We're very sorry. But thanks to you, we won't do it again." With that admission Bernanke not only acknowledged that government, specifically the Federal Reserve, caused the Great Depression, he made it clear that nearly all our economic problems are caused by government and made worse by more government. And the Fed wasn't solely responsible for the Great Depression - the protectionism of Herbert Hoover and FDR's New Deal made the depression deeper and longer than it should have been. We've known since the United States was founded that government is a burden on Americans and our economy. Government is a necessary evil, empowered by the people to perform a few, very limited duties. But because our professional politicians, aristocrats that were never supposed to exist in America, long ago abandoned the Constitution, government is a titanic burden on Americans and our economy. The burden of our government dwarfs every other country. Thanks mostly to Republicans, the Federal Government will suck $2.9 trillion from taxpayers this year. We're paying interest on $9.5 trillion in debt. The US has the most punishing tax rate and complexity in the industrialized world. Individuals and businesses spent $265 billion in IRS compliance costs, over and above their taxes, in 2005. State and local governments double the burden. As a result, jobs and capital flee to more business friendly countries every day. Government interferes in every sector of our economy, and government interference created our current economic woes. Bill Clinton forced lenders to make high risk loans, creating the subprime mortgage problem. Early in this decade, Greenspan's Fed pumped too much money into the economy, much as the Fed did before the Great Depression. The resulting economic bubble burst last year, leading to our current (relatively minor) economic problems. If government stayed out of the way, the market would correct government's errors relatively painlessly. But in an election year, buying votes is the priority, not allowing Americans to fix the problems as painlessly as possible. The so-called economic stimulus proposals from our politicians are frighteningly similar to the failed policies of Hoover, FDR, Nixon and Carter. Hillary Clinton and Barack Obama are proposing government guaranteed loan rates. That's a euphemism for price controls. Democrats are threatening windfall profits taxes on oil companies and implementing the largest tax hike in history by allowing the Bush tax cuts to expire. Democrats seem nostalgic for Jimmy Carter's stagflation economy. They want taxpayers to pay people not to work by extending unemployment benefits. Federal, state, and local governments are hiring at a record pace, ostensibly to make up for private sector layoffs. But if the private sector can't afford to pay people to work in the private sector, it can't afford to pay them to work for government. Like putting more people on an airplane taxes the engines and sucks more fuel out of the tank, government hiring taxes the private sector and sucks money out of the economy. The result is higher unemployment and debt. John McCain and Hillary Clinton are proposing a gas tax holiday. That's exactly what voters want to hear, but it's bad policy. When gas prices suddenly drop, people will drive more, increasing demand and pushing the prices back up. The price of gas will instantly skyrocket when the taxes come back into effect. Worse, the gas tax holiday is more debt. Republicans and Democrats united behind tax rebates for poor and middle class Americans, but many recipients don't pay any tax in the first place. That's no rebate. That's just a taxpayer funded handout to buy votes from people who pay little to no taxes. And it's more debt. Reducing the burden of government would help. We should cut spending and pay off the debt. Since we're on the wrong side of the Laffer curve, we should cut taxes to increase revenue. Because a big part of the cost of oil is speculation, announcing plans to drill for oil in ANWR and off the coast of Florida, increasing future supply, would drive down the price. Reducing restrictions on nuclear and coal power plants, reducing future demand for oil, would drive down the price. Reducing restrictions on building refineries would drive down the price of gasoline. But the best economic stimulus package is the FairTax. The FairTax would replace all income and payroll taxes with a consumption tax. Every American would get a raise from keeping 100 percent of their paycheck. Tax compliance costs would disappear. With no tax on labor, investment, savings, or accomplishment, every company in the world would move jobs and money to the US. US products would compete on a level playing field with products from our trading partners, all of whom have adopted a business friendly VAT tax, instead of being at a 22 percent disadvantage like today. It looks like American workers and businesses already overcame this downturn before government could do more damage. The dollar is on the rise and the economy is swinging back already, but prepare for politicians to mess up the recovery. We have to take our power and freedom back from government aristocrats before they bury us under so much debt that we'll never recover.