The Obama Stimulus Has Failed
May 31, 2011
RUSH: Look, we know that Obama's stimulus plan, Obama's stimulus was nothing more than a money laundering slush fund. We know that now. We know that in any number of ways, learning it most recently from Wisconsin. A full 80% of the money that Wisconsin got went to the public sector unions -- and, of course, that money, a percentage of that just goes right back to the Democrat Party. But let's say -- just for the sake of discussion, playing devil's advocate, let's -- that Obama is simply as a misguided, well-intentioned statist; and he really believes that massive government spending to the tune of a trillion dollars will grow an economy and create jobs and all that. You need to first ask a question: How do we define growth? Is growth not the pie getting bigger?
Economic growth that the gross domestic product -- the economic output, the sum total of it -- increases, meaning brand-new jobs are created. People with jobs are compensated with raises, higher incomes. New products are invented, and the pie grows. That's what economic growth is. It can be nothing else. Otherwise you have stagnation -- or if you have depression, you've got negative growth, which is the economy shrinking, getting smaller, which in fact is what's happening. Okay, so we've defined growth. Now we ask ourselves: How does it happen? The government wants our economic pie to get bigger -- and here comes Obama, saying, "Oh, I got the plan.
"We're gonna spend a trillion bucks, and we're gonna but that trillion bucks to work immediately. We're gonna inject that trillion bucks right into the economy." Ooh! Cool! But is it going to be a trillion dollars that's not in the economy already? In other words: Where's the government going to get the money? If the government is going to take the money from somewhere else in the economy and spend it somewhere else in the economy what you have is not growth but shifting, but you have no growth -- and that's what the stimulus bill purportedly was. That's not even what it ended up doing, but that was how they sold it.
"Keynesian spending! We're gonna grow the economy! We're gonna put a trillion bucks in it."
Where'd they get it? They had to borrow it, print it, tax it, or what have you. But it wasn't created out of growth. In fact, the way the money was procured would lead too economic stagnation, if anything; it would not lead to growth. Never has. If Keynesian economics worked, if pumping government money into a faltering economy worked, there would never be a faltering economy. We woulda learned it the first time, it woulda worked, and every recession that came along or every near depression that came along, all we'd have to do is pump some money into it and, voila! It'd be over with. It never works, does it? A guy at the Heritage Foundation, Brian Riedl, came up with an analogy to explain why government intervention to boost the economy doesn't work. He used a swimming pool.
Removing water from one end of a swimming pool and pouring it in the other end will not raise the overall water level. In fact, it won't change anything after a while. It might make the deeper end deeper for a brief time -- it might make the shallow end shallower for a brief, brief time -- but then it all levels out. Well, it's the same premise. If you take dollars from one part of the economy (i.e, the rich) and you distribute those dollars to another part of the economy, you're not growing anything. You're simply redistributing. And if in the process the recipients of your redistribution are getting it for not doing anything -- if there's no accompanying activity to warrant the receipt of that money other than they're just sitting there and they happen to be Democrat voters -- then you really screwing yourself.
And under the best laid plans that's what the stimulus was, being totally well-intentioned. We know that's not what it was and we know it was a slush fund. We know, folks, it was nothing more than a money laundering scheme. We know that now. But if they really were just mistaken, and they thought they could inject a trillion dollars by redistributing it, it doesn't work. It has never worked, and it will never work. So the question is: Do these guys know that and they're just lying to us, or are they really economically ignorant and utopian fools who really believe this stuff? At this point I don't care. All I know is that they're dead wrong, and what they're doing has been destructive and it's gotta stop.
They're destroying the housing market; they've destroyed the job market. They have made a college education worthless. It really is. I mean, look at the stories you get on that now. College education? It doesn't mean anything to people you had a degree now. What was one of the big stories last week, Peter Thiel, one of the cofounders of PayPal. He's paying people scholarships not to go to the college. "You know what? I'll give you a hundred grand to sit around and be an entrepreneur. I'll give you money. You can apply for a grant and I'll give you a hundred grand to sit there and develop an idea you really feel passionate about. Screw college."
There were Twenty-four recipients of this idea. I'm sure some of them will make something out of it, too. You know, passion and desire being major ingredients of success. So in the midst of this (and the Heritage people point this out in their Morning Bell blog today), last week the House Republicans came up with a proposal to actually create job growth. They wanted to reduce regulations and taxes; they wanted to promote free trade. Essentially, they wanted to make it easier for businesses to grow, to invest in themselves, to hire people, which would thus grow the economy, reduce unemployment -- and the left, like clockwork, went on the attack, claiming, "Eh, it's the same old ideas with fancy new clip art."
The New York Times described it as "more of the same fixes the Republicans always recommend no matter the problem." But ironically, it's the left calling for more of their same ideas, and they responded with policies last week that would -- if you add 'em up -- equal a combined federal and state top tax rate on earnings of 62%. That would be the top rate. Hello. 1970s! You know, Ronald Reagan took office in 1981, the top marginal rate was 70%. The Democrats want to go back there. By the time you take away the charitable deduction and all that and the other plans that they have in mind, you have a top effective rate of 62%, top marginal rate. Now, if you got a rate like that I guarantee you there isn't gonna be any job growth.
Nobody is gonna be trying to earn the dollars that are taxed at 62%. You're gonna say, "The hell with it." You'd be a fool, you would be an absolute fool to spend a lot of time and industry earning dollars that you get to keep 38 cents of! Wherever that rate kicks in, whatever income level kicks in at, that's where you stop busting your butt and don't care about it. It's senseless. That's why Reagan cut the 70% rate to 50 and then the 28. Look what happened when he did? Economic growth out the wazoo! Democrats panic and revisionist historians got into gear and trying to tell us that trickle-down economics didn't work.
No. We're supposed to revel in what's happening now. We're supposed to have faith in what's happening now. We're supposed to be patient! "Don't change horses in the middle of the stream. Why, our plans are just now starting to take root." If we stay with these plans, the sight is not going to be pretty. It is going to be a wanton economic destruction that's so unnecessary brought about by people who have a grudge or a chip on their shoulder or whatever it is about this country that they can't stand, and then they think it's time that this country paid the price for whatever transgressions these people think the United States has committed. In the meantime look at what's happening.
Wherever you go, wherever the economic news is, it's not just bad, it is disastrous. Utter disaster is happening right before our eyes. The only growth that this regime is interested in is in the growth of government and those who are dependent on it. That's the growth they care about. They want more people earning less money, depending more for supplemental income on the government. That equals voters. How well, ladies and gentlemen, would it have worked for General Motors to have borrowed money from Ford to try to get out of their bad debts and pensions? How would that have worked? Well, what are we doing but borrowing money from our economic competitors the ChiComs? That's what we're doing. Whether it's accidental or whether it's by design, we're on the wrong horse, and we need not just to change horses in the middle of the stream. We need to reverse direction.
We need to turn around with somebody else on the horse! Illinois just raised their top tax rate to 66%, and it still isn't working, and there is an increase in exits from the state of Illinois. They're in worse shape than ever. Why would it work for the US government? The only difference is, you cannot leave the United States. You can leave Illinois. Well, you can leave the United States but nobody wants to have to do that. What kind of option is that? It's silly to have to bring it up.