In a throwback to the 1930s and 1970s, Democratic lawmakers are betting that America’s economic ills can be cured by an extraordinary expansion of government. This tired approach has already failed repeatedly in the past year, in which Congress and the President:
1. Increased total federal spending by 11 percent to nearly $3 trillion;
2. Enacted $333 billion in “emergency” spending;
3. Enacted $105 billion in tax rebates; and
4. Pushed the budget deficit to $455 billion in the name of “stimulus.”
Every one of these policies failed to increase economic growth. Now, in addition to passing a $700 billion financial sector rescue package, lawmakers have decided to double down on these failed spending policies by proposing a $300 billion economic stimulus bill. Even though the last $455 billion in Keynesian deficit spending failed to help the economy, lawmakers seem to have convinced themselves that the next $300 billion will succeed.
This is not the first time government expansions have failed to produce economic growth. Massive spending hikes in the 1930s, 1960s, and 1970s all failed to increase economic growth rates. Yet in the 1980s and 1990s-when the federal government shrank by one-fifth as a percentage of gross domestic product (GDP)-the U.S. economy enjoyed its greatest expansion to date.
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“Jesus said to his disciples: ‘Be constantly on the watch! Stay awake!…You do not know when the Master of the house is coming.’” (Mark. 13:33)
