From the radically-leftist New York Times.
While proud of his record, Obama has already begun thinking about what went wrong — and what he needs to do to change course for the next two years. He has spent what one aide called “a lot of time talking about Obama 2.0” with his new interim chief of staff, Pete Rouse, and his deputy chief of staff, Jim Messina. During our hour together, Obama told me he had no regrets about the broad direction of his presidency. But he did identify what he called “tactical lessons.” He let himself look too much like “the same old tax-and-spend liberal Democrat.” He realized too late that “there’s no such thing as shovel-ready projects” when it comes to public works. Perhaps he should not have proposed tax breaks as part of his stimulus and instead “let the Republicans insist on the tax cuts” so it could be seen as a bipartisan compromise.
It would have been nice to know that 2.7 trillion dollars and 8 million jobs ago.
Economics in One Lesson
Perhaps it is time to review Henry Hazlitt’s Economics in One Lesson, chapter 4, entitled “Public Works Mean Taxes”.
Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.
Excerpt that the government, lacking a profit motive, is never as efficient as private business is in spending money – government wastes money that it never earned in the first place.
And consider Chapter 5 as well, entitled “Taxes Discourage Production”.
In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.
There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.
George W. Bush cut taxes in his first term and created 1 million NEW JOBS. Government spending is a job killer. Companies understand that government spending has to be paid for eventually, so they stop hiring people now to save the money for later tax increases.