Federal spending won't grow economy

Economic history shows that FDR attempted to stimulate the economy during the depression by spending the equivalent of $500 billion in today's dollars. Economic output and personal income both fell throughout that decade. In the 1970s Congress gave rebates to taxpayers to stimulate the economy. The economy got worse and a presidential candidate who promised tax cuts was elected in 1980. In 2008 Congress gave tax rebates to taxpayers and non-taxpayers to stimulate the economy. The economic growth rate promptly declined. In the '90s, Japan implemented 10 separate stimulus packages of infrastructure spending. Their economy was stagnant throughout the 90s. Does anyone detect a pattern?

Government spending won't grow the economy because Congress can't create money and has to borrow it from people who would otherwise spend or invest it. If you buy $5,000 of government bonds, the government will have $5,000 more to spend, but you will have $5,000 less to spend. It's like taking water out of one end of the bath tub and pouring it into the other. No matter how large the glass or how often you try, the water level won't rise unless you turn on the faucet. Since Congress doesn't have a money faucet, "stimulus" spending simply transfers capital from one part of the economy to another. Instead of the private sector deciding how to spend the money, the decisions will be made by politicians, and the only thing sure to grow is the government debt.

Despite the fact that "stimulus spending" has never created economic growth, the Obama administration wants to double-down on a failed policy from the 1930s. While complaining that banks aren't making enough loans, the president proposes to further reduce the amount of credit available by borrowing $1 trillion for the politicians to spend. Brilliant. Just brilliant.

Wayne Sills

Winfield