Saturday, August 07, 2010

When can we declare the liberals' economic experiment finished?

The Democrats have had the past year and a half to do their best to fix the economy. They've tried their stimulus. They've bailed out companies. They've saved union jobs. They've saved public sector jobs. They've passed ObamaCare. They've done what they thought was best to help our faltering economy. And it has failed.

Unemployment continues at higher levels than when they started. Hundreds of thousands of people have lost hope and stopped looking for jobs. The private sector is too uncertain as to what government will do next to invest in growing the economy and hiring more people. It's time to end the liberal experiment and try something else. They have failed.

As the WSJ writes today, it is time to try a different approach.
So far the Obama team has thrown the entire Keynesian playbook at the economy. We have paid people to buy cars, purchase homes, pay off their mortgages, weatherize their homes and put solar paneling on their roofs. And of course there was the original stimulus package of $862 billion, though some of that remains unspent. None of it has put America back to work.

The policy lesson is that you can't have a jobs recovery without private confidence and investment. The Obama crowd bet that you could force-feed private investment with government spending and politically directed credit, but the result has been to traumatize business instead. Why would a small business owner hire anyone new if he knows that taxes are going up, health-care costs are sure to rise, and the cost of each new employee is uncertain? Nor can you inspire business confidence if you demonize bankers and business.

The economy is now 2.5 million jobs short of where it would need to be to get back under the 8% unemployment rate we were promised. With the federal government running a $1.4 trillion deficit, Speaker Nancy Pelosi is calling the House back into session to pass a $26 billion "stimulus" bill to give cash to states, cities and teachers unions.

As the evidence mounts that government spending doesn't create net new jobs, the White House insists we need to double down on spending and monetary stimulus. We've now had three years of this policy, and it isn't working. Time to try a different economic model, the one that worked in the 1980s after another severe recession.
We've tried the liberal experiment. Its failure is clear. Let's not double down on their bad bet.