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    Bush and Obama’s Bad Investment Of $1,000,000,000,000

    01/25/2011

     Democracy and Power:  104 Future Debt Burden

    A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz

     

    Bush and Obama’s Bad Investment Of $1,000,000,000,000

    John Cogan and John Taylor economists from the Hoover Institute and Stanford University have examined Presidents Bush and Obama's stimulus policies.  Cogan and Taylor concluded these were terrible investments:  Neither worked. After more than three years since the crisis flared up, unemployment is still very high and economic growth is weak.

    Why?  Presidents Bush and Obama and their Congresses rushed to invoke Keynesian theory over the works of two Nobel Laureates, and a former member of the Federal Reserve:  The irony is that basic economic theory and practical experience predicted this would happen. If policymakers had only remembered what Milton Friedman, Franco Modigliani, and Ned Gramlich had said, we might have avoided these two extremely costly policy failures.

    Economics is the boring science, but this article should be read.  

    The executive summary of government incompetence is:

    • The Bush stimulus sent checks to Americans to increase spending
      • One time injections don’t work
      • Consumers saved and did not spend
      • Friedman and Modigliani had previously proved that consumers make decisions on life time expectations
      • Wasted $152 billion
    •  The Obama stimulus went to a combination of federal government projects, state government grants, and individual consumers
      • Federal government is bureaucratically slow – not shovel ready
      • State government reduced their debt and did not invest in infrastructure
        1. In 1979 Gramlich had proved the states use federal grants to offset their debts
        2. Most of the state grants went to Medicaid (healthcare for the poor) which does not stimulate the economy
      • Again, consumers saved and did not spend because of the life time expectations
      • Wasted $862 billion

    Again, read Cogan and Taylor’s article

    Call your Congressman and Senators.

    This enormous increase in debt is a burden on all Americans. You, your children and grandchildren shall pay for this incompetence. Stop the next harmful investment, which is in truth debt – dangerous debt.