President Obama made it equally clear that Democrats would set the agenda. He reminded Republicans by simply replying, “I won,” when he recently met with them and heard their proposal that cutting taxes would do more to stimulate economic growth than providing the proposed tax refund. This partisan political tone seems an attempt to explain why repaying the exorbitant political indebtedness of the Democrat Party (and the Obama campaign), to a multitude of special interest groups, from unions to environmentalists to pacifists to proponents of wealth redistribution and nationalized healthcare, is more important than the historical evidence, staring us all in our faces, that government spending does not create wealth.
Even so, we are all Americans, and the mistakes of Democrats (or Republicans) become our collective ones. Government spending does not create wealth because the source of government spending is tax revenue from taxpayers. Government spending is merely a redistribution of wealth. If you are the federal government and you can’t borrow it, then you start printing dollar bills. Of course, each dollar printed diminishes the value of the dollars already in circulation. As King Solomon wrote in Proverbs, “The borrower is servant to the lender.” Simply, a weak currency leads to a weaker nation.
And for what? Even if spending $852 billion, through the stimulus plan, produces the result intended, which is to “save or create” 3 million jobs, the cost per job saved or created would be $275,000. If you spend $275,000 to save or create a job that pays a median salary of $40,000, that’s a heckuva lesson in economics to comprehend. But again, you must consider the partisan, political instigation for this stimulus plan. Out of the $852 billion, there’s $400 million “earmarked” for global-warming research, $2.4 billion for carbon-capture demonstration projects, $2 billion for child-care subsidies, and $1 billion for Amtrak, even though they have not turned a profit in 40 years.
Does any of this sound like job creating investments that have the potential to jump-start our economy?
There’s $83 billion in financial assistance for those who pay no income tax at all. The stimulus plan includes a total of $252 billion of income-transfer payments such as Medicaid, unemployment benefits, and food stamps. These are all worthy endeavors in terms of providing economic compassion to the least among us, but clearly the allocation of billions of dollars in these areas will not create (or save) a single job.
You know what creates jobs? A free market economy and small businesses. These businesses, with 500 or fewer employees, account for over half of all jobs and generate 51 percent of the total U.S. gross domestic product.
Currently, government regulations require 23 percent of all federal procurement dollars be spent with small businesses. What if the same regulation was applied to the $825 billion stimulus plan? With the resulting increased sales, small businesses would pay proportionately higher taxes, from sales taxes to property taxes. This would infuse local and state governments with sorely needed revenue to continue government services, from education to infrastructure. With increased sales, small businesses would hire new employees, reducing unemployment and increasing consumer spending as a wonderful consequence of it all.
And for you folks who may still doubt “trickle-down” economics, or the policy of providing incentives for spending or investing, let me explain this so that even a liberal can understand it: From time to time, I receive coupons from my favorite office supply store. These coupons offer me an incentive to spend $75 at one time. If I spend $75, the store will discount my purchase by $15. You with me so far? Okay. When I get to the check-out, let’s say my purchase only totals up to $55. What do I do? I go back and buy $20 more of supplies, just to save the $15, provided as an incentive, for my purchase of $75 or more. The millions of folks like me, collectively, by purchasing more supplies, now create a higher demand for the manufacturer of the pencils, staplers, rubber bands, scissors, etc., and those manufacturers now hire new employees or build a larger warehouse or purchase new equipment or buy a new truck …all to keep up with the increased demand for their product. And all because the office supply store provided me with an incentive to purchase more.
If the office supply store would employ some of the strategy of the $825 billion stimulus plan, it would just hand me $15 worth of pencils, rubber bands, staplers, etc., without my having to do or give anything in return. While this would provide a great benefit to me, and millions others like me, it would do little to save or create even a single job, but it would create billions of dollars of debt to the office supply store.
Well, this is the crossroads where our country is parked, whether you are a Democrat or Republican. Yes, Democrats won the election. But there’s just no justification for taking us all, and future generations of Americans, for a joyride down on a one-way street filled with potholes and in a car we simply can’t afford to own.
Louis R. Avallone is a Louisiana native, attorney and small business employer in the construction industry from Shreveport. He can be contacted at firstname.lastname@example.org