Spare change we can believe in

Apparently when Candidate Obama promised “change we can believe in,” he was talking about the change that we will have to beg strangers for as they walk past our cardboard homes on busy, urban street corners.  Last Friday, Mr. Obama’s chief economic advisor, National Economic Council Director Larry Summers, warned of prolonged periods of high unemployment.  “The level of unemployment is unacceptably high,” Summers told reporters.  “And will, by all forecasts, remain unacceptably high for a number of years.”  This is bad news for Democrats who pushed through a $787 billion dollar stimulus spending bill in February with the promise that unemployment would not surpass 8%.   It is even worse news for American citizens who now face unemployment above 9% and who will have to foot the bill for an ever growing deficit. 

So why, after passing a stimulus package which was designed to “create or save” millions of jobs, are unemployment numbers so high?  Is the stimulus failing to create jobs?  In a way: no.  In a more accurate way: yes.  Let me explain.
The government run stimulus package was designed to create– who would have guessed it?– government jobs.  Government jobs kill private sector jobs.  According to one study that examined the Swedish economy, for every government job created 1.15 private sector jobs were destroyed.  Simply put, government spending does not create jobs on net; it ruins them.  Even worse, the increased taxation which will be needed to pay for the stimulus will raise unemployment and stifle economic growth.  According to the Heritage Foundation “research shows that reducing government spending helps the economy while raising taxes harms it.” 

So with a prolonged period of high unemployment and excessive taxation on the way, I guess all that we can do is hope that people walking by our cardboard homes can spare a little more of their change.