The Senate passed
its $1.1 trillion spending package Sunday, re-igniting fears inside and outside of Washington about the federal government's massive spending.
Number-crunching critics warn that a health care overhaul, the escalation of troops to Afghanistan, the
extension of the Troubled Assets Relief Program (TARP) and other costly
spending measures are adding up astronomically. How worried
should we be about government spending?
- Mired In Expensive Projects Nicole Gelinas, excerpting from her book in National Affairs magazine, cautions that over-spending puts the entire economy at stake in specific projects. "With trillions of taxpayer dollars tied up in bad financial
institutions and spent on economic stimulus, the federal government
will inevitably shortchange needed improvements to America's physical
infrastructure, making it harder for private companies to grow. We also
risk inflation and the desertion of the dollar just as Social Security
and Medicare are laying painful claims on growth."
Tax Cuts, Not Spending The New York Times's Greg Mankiw surveys a wide range of economic studies. "The results are striking. Successful stimulus relies almost entirely on
cuts in business and income taxes. Failed stimulus relies mostly on
increases in government spending," he writes. "These studies point toward tax policy as the best fiscal tool to combat recession,
particularly tax changes that influence incentives to invest, like an
investment tax credit. Sending out lump-sum rebates, as was done in
spring 2008, makes less sense, as it provides little impetus for
spending or production."
- Spending Must Be Decreased The Washington Times's J.T. Young sounds the alarm. "As is the case with all debts, this one came (and came and came) as a
result of living beyond one's means. However, only a government in a
recession - or a sailor on shore leave - could do so in such
spectacular fashion and so short a time," Young writes. "Eventually the recession will end, the economy will recover, and the
revenues will return. The question is whether federal spending will be
equally accommodating. There are real reasons - both within the current
budget numbers, and in upcoming events, to believe it will not."
- Can American Remain Competitive? The Dallas Morning News worries
that debt will over-burden America in the global economy. "It's
important to remember that a heavily indebted United States simply
can't compete in a global economy by borrowing and spending its way out
of this recession. Most of the emergency actions taken by the Bush and
Obama administrations slowed the bleeding and bought time for the
economy's vital signs to stabilize. Now the administration should put
its muscle behind efforts to create a
bipartisan commission forcing lawmakers to make difficult reductions in
federal entitlement programs."
Focus On Over-Regulation The Washington Post's Charles Lane finds
three regulations that he insists cause more harm than good. He cites
the heavily-regimented sugar and construction industries as well as the
federal minimum wage, which he says should be reduced. "[S]tudy after
study has shown that this supposed benefit to the poor
prices low-skilled workers out of entry-level jobs. It was unwise to
keep raising the cost of hiring them in a recession," he writes. "None
of these measures alone, or even all three together, would
eliminate unemployment. But they might significantly decrease it at a
time when every job counts."
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