Stop the Spending, Cut the Taxes

Headline of the Investors Business Daily column today: Stop the Spending, Cut the Taxes. Exactly. The economy is shedding jobs faster than a collie's fur in mid-summer. Anyone not still under the cult following of this epic failure of a President knows what needs to be done, but the powers in Washington are explicitly ignoring it.

From the column:

Here we've had a $787 billion stimulus package, $700 billion in TARP funds and a variety of Treasury and Fed initiatives that, according to Bloomberg News, add up to $11.6 trillion in taxpayer exposure — all as part of an effort to revive the economy. And what do we have to show for it?

At the start of the year, the White House forecast 4 million new jobs by the end of 2010. It took some uncharacteristic understatement from Vice President Joe Biden, as he met with his middle-class task force Friday, to put the jobs report in perspective: "We still have a whole lot more work to do."

No kidding. Since the start of the year, the U.S. has lost 4.1 million jobs — 7.2 million total since the recession began.

Americans were told early this year that passing the stimulus was vital, that it would put us back on the path to economic growth and that joblessness would top out at 8.5%. Now we're looking at 10%.

Politicians may act surprised, but they shouldn't be. They caused it. Policies based on massive government spending, higher taxes and costly regulation don't work.

We've warned since last year that any "stimulus" built on Keynesian spending is doomed to fail. The idea that there's a multiplier effect — that is, a net GDP gain — from the government taking your money and spending it for you is, quite plainly, absurd.

Indeed, respected Harvard economist Robert Barro, in a National Bureau of Economic Research study last month, found no solid evidence for a positive multiplier effect. What he did find was powerful evidence that a one-percentage-point cut in tax rates leads to a boost in the growth of GDP of 0.6%.

No surprise. From Coolidge to Kennedy to Reagan to George W. Bush, tax cuts have galvanized weak economies.

The bigger lie being foisted on us is that increasing spending through healthcare "reform," is the ticket to economic nirvana - patently false. Can we please get some adults in Washington?