Wednesday, August 17, 2011

Good Thing It Isn't Urgent....

At first, when I read that Obama was on another vacation, I just rolled my eyes.  Then, when I stopped to think about it I realized that when he's on vacation, he's not further weakening the economy.  Have a good trip sir. 

Then I read that as soon as he gets back from this latest vacation and the trip Mitt Romney has dubbed the "Magical Misery Tour" (yes, it's coming to take you away) that he's going to lay out a "jobs" plan.  So far Obama's jobs plan has been to hire more permanent government workers and funnel money to states in a one time spree to ensure they didn't cut their budgets to manageable sizes.  This has done nothing to spur the economy, and it's not surprising to anyone willing to spend a moment to analyze wha this means. 

Additional government spending first involves selling more bonds to raise money.  These bonds are (still) considered extremely safe investments and many people looking to park their money somewhere safe have chosen to purchase these bonds.  This is money that does not get invested in new ventures, added to existing capital, or reinvested in the stock market.  This creation of new government debt also signals that additional government revenues will be needed to pay it off.  Then we get to the actual expenditures.  Typically a business spends money on those things that grant it a return.  The greater return the more we say it was an efficient use of capital resources.  The government is not interested in return per se, but when your stated purpose is to "grow the economy" it's fair to look at the efficiency of use of capital resources. 

- Extending jobless benefits for 99 weeks - What is the economic efficiency of this expenditure?  I am not going to answer it except to ask the question in a different way.  How much economic benefit is there to pay people to NOT produce.

- Creating new regulations - Discouraging innovation, expansion and entreprenneurship in response to last years news doesn't do a lot of good.  The government was late to the party that it helped throw and its regulations (Dodd Frank, NLRB, EPA) do nothing to punish those who did wrong, but hurt those looking to do right in the future.  Lots of economic benefit there.  Really.

- Food stamps:  This is a new one on me, but according to a recent White House statement, food stamps are economic stimulus.  Really, all they're doing is to help offset the rising cost of food caused by loose monetary policy, farm subsidies, and ethanol mandates. 

- Massive new government entitlement - This may actually have some economic benefit at first as businesses are encouraged to shed the high cost of providing affordable health care to their employees.  This will shift the cost to The Government, that great all powerful well of neverending money.  Then the bill will become due and the estimates of $1 trillion in total cost will seem like a pipe dream. 

This discussion reminds me of a recent Rick Perry statement that he hopes to make government irrelevant in most people's lives.  Amen.

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