The deficit today crossed the startling trillion dollar threshold, a number never before even contemplated for a full year of federal borrowing, but that we have now breezed through in just half a year. Such a deficit represents a crushing future tax burden for ourselves, our children, and our grandchildren -- who will pay back every penny with interest. The so-called stimulus bill was slammed through on partisan lines despite the overwhelming anger of almost everyone who was paying attention. The bill, we were told, was our economic salvation (purely a coincidence, of course, that it happened to contain every item on the left's big government wish list). Now the verdict is in, and it's ugly.
Unemployment -- which the stimulus was supposed to keep under 8 percent -- is officially at 9.5 percent, and is 16.5 percent if you include people who have given up looking for work and part-time workers who wish they were full-time. Businesses continue to slash investment, close facilities, and hoard cash. The economy remains firmly in recession, with recovery now long overdue. The average post-World War II recession lasts 10 months; we are now 19 months into this one with no end in sight.
So, in the bizarre through-the-looking-glass world of Washington these days, maybe it should come as no surprise that the reaction to the abject failure of the stimulus is to call for more of the same. Senate Banking Committee Chairman Chris Dodd (D-Conn.) said the stimulus didn't work because is wasn't "as targeted as it should've been" and "we need to go back to this and do this again. We need to do more of that." If the old quote often attributed to Einstein is true, then Dodd and other supporters of another stimulus are insane -- they want to make the same mistake again and expect a different result.
We should know better. The new stimulus being floated has been called "Stimulus 2," but that ignores the failed Bush stimulus from last year. Of course, we most famously stimulated ourselves into oblivion back in the 1930s, when ever-bigger spending packages spiraled us deeper and deeper into the Great Depression. In May 1939 FDR's Henry Morgenthau, the Treasury Secretary, gave up on spending, saying: "We are spending more than we have ever spent before and it does not work."
It's actually pretty simple economics. The government does not create resources by spending; it simply moves them around. Every dollar the government spends has to come from somewhere, but the only three options all make people poorer. Higher taxes take money out of people's pockets, and deny them the freedom to spend, save, or invest that money according to their own values. Simply printing money is inflationary, and destroys the value of every American's savings, slams people on fixed incomes with higher prices, and creates a huge hurdle to new investment.
The only other option, which we have relied on to the tune of over a trillion dollars already this year, is to borrow. But borrowing is no free lunch either; every dollar borrowed by the government is a dollar no longer available for private investment. Moreover, we have to pay back all the money we've borrowed, with interest, meaning that in the long-run the only two options are huge tax hikes or skyrocketing inflation.
Quite simply, it is impossible for government spending to make us richer when every way the government can raise money makes us poorer. We can't afford another stimulus, a government takeover of health care, the cap-and-trade energy takeover, or any other radical big government policies. A six-month deficit of over a trillion dollars is enough. Taxpayers deserve some time to pause, catch their breath, and worry about their own jobs, lives, and families. Washington has "helped" quite enough; it needs to leave people alone.
Phil Kerpen is director of policy for Americans for Prosperity, which runs the anti-stimulus Web site www.NoStimulus.com. He can be reached through www.philkerpen.com and his free daily podcast is available here.