What is wrong with deficit spending?

It is common sense that if you are deeply in debt, you should think carefully about whether or not to add more debt. Adding to the already gargantuan liabilities of future generations, as the Democrats' latest spending bill would, is much more likely to do harm than good. David Limbaugh made the case against saddling our children with this massive debt much better than I could in a recent column. Medical students are taught to first do no harm. With the imminent passage of the Democrats' stimulus package, we are about to find out what harm can be done by excessive government spending.

Spending proponents argue that we have such a massive economic problem, unprecedented government action to stimulate the economy is necessary. They add, as the President did in his televised press conference, that all spending in stimulus. When critics counter that Roosevelt's New Deal didn't end the Great Depression and Japanese government spending failed to prevent the lost decade of the 1990s, spending proponents reply that both efforts failed, if they failed at all, by spending too little. I reject the spenders' arguments and look to good old, traditional, American thriftiness instead. Here is why.

First of all, since we have never seen government spending on such a massive scale before, there is no comparable historical event we can use to predict the effect we will see. Acting on a speculative theory on such a large scale inherently violates the principal of “first do no harm.”

Second, raising the government's share of the overall economy crowds out private investment because the government competes unfairly by using its tax authority to generate funds. Government enterprises also crowd out private enterprises as the government's size provides unfair competition in the form of higher negotiating power and sometimes exemption from regulations. These factor combine to reduce innovation and entrepreneurship in the overall economy. Consequently, any stimulative effect of the spending bill is likely to be counteracted by the drag caused by increasing government's role.

Third, all spending is not stimulus. When governments spend on the types of programs that are contained in this bill, there is inevitably waste, which causes the spending to be inefficient. In addition, there are always strings which impose additional costs on the recipients, adding to the inefficiency. Moreover, government can never do as good a job of picking winners and losers as the market. The resulting waste and mis-allocation of resources is an additional drag on economic performance, which is the opposite of stimulus.

Fourth, our economy depends on the profit motive causing people to work harder. All of the above factors reduce the profit margin for workers, leading to sluggish economic performance (think France). Government jobs and government paychecks are subject to interruptions that depend not at all on the performance or worthiness of the worker or recipient. The resulting financial uncertainty will cause those who depend on the government to hold onto their money, reducing consumer confidence and spending overall. Less hard work and tighter spending together work to cancel out the predicted stimulative effects of government spending.

The bottom line is this spending bill is very unlikely to work and a bigger one is even less likely to work. If you don't believe this analysis, just watch in the next few years as we waste trillions of dollars and the recession extends out past the next congressional elections. If we are lucky, we will only experience stagflation like in the 1970s. But with the level of debt the Democrats promise, stagflation is likely to turn into rampant inflation in the not too distant future.

Further reading on same-sex marriage

One of my readers suggested I provide some references to support the concepts I have written about in my earlier posts on why the state sanctions marriage. For starters, here are a few links that support my contention that same-sex couples are more promiscuous than heterosexual couples. Comparing the Lifestyles of Homosexual Couples to Married Couples by the Family Research Council, is a well referenced (56 citations), easy to read summary of many studies comparing homosexual relationships to heterosexual relationships. If you only have time to read on thing on this topic, this is an excellent place to go. Another easy to read special report from the Traditional Values Coalition quotes some Statistics On The Homosexual Lifestyle that support the idea that people in same-sex relationships are more likely than heterosexuals to be promiscuous. The Women's Prayer and Action Group (WPAAG) provides a site discussing various aspects of Homosexuality and Same Sex Marriage. Of particular interest are the “in-their-own-words” sections which include quotes from homosexual authors about promiscuity and same-sex marriage. Finally, Joe Carter at Evangelical Outpost provides a heavily referenced response to an assertion by one of his correspondents, Josh Claybourn, who suggest that male homosexuality is a myth. Don't miss the section about the 1984 book “The Gay Couple,” noting what happened to the authors' hopes to dispel the promiscuity myth. Mr. Carter provides references to several other reports suggesting that even in committed relationships, homosexual men are not at all likely to be monogamous.