Stimulus: the sequel–hillary promises to revive a failed policy

Stimulus: the sequel–hillary promises to revive a failed policy–4.47h.,b12-1.43

In the wake of the miserable May jobs reports and even more miserable first-quarter GDP numbers, Hillary Clinton revealed her long-awaited agenda to fix the economy: Raise the minimum wage; hike taxes on the rich; and spend a quarter-trillion dollars more on public works. Clinton is calling for “the biggest infrastructure investment since Dwight Eisenhower’s interstate highway system.

Doesn’t this sound exactly like President Barack Obama’s $840 billion stimulus plan circa 2009? All that is missing from this spending blitz manifesto is the mythical rhetoric of “shovel-ready” projects.

‘Over the period 2009 to 2013, job creation was significantly below what the White House promised. Unemployment was higher each year than what the White House had projected it would be without the Stimulus. If Obama had simply done nothing in 2009, the economy would have produced more jobs. Even worse was growth much lower than expected. The combined loss of GDP in these years from what was predicted adds up to a growth deficit of over $2 trillion. This is the equivalent of losing a year’s output from the states of Michigan, Ohio, and Pennsylvania.

What they won’t admit is that,  nearly everything we were told by the Keynesian economists during the early years of the Obama recovery has proved to be wrong.

What, for example. happened to the magical “multiplier effect”?.  “Economists agree that unemployment benefits remain one of the best ways to grow the economy,” Nancy Pelosi told  us. “For every dollar spent on unemployment benefits, the economy grows by, according to one estimate, $1.52; by others, $2.” None of it worked.

The burst in federal borrowing under Obama was canceled out by a steep decline in corporate borrowing and investing. And it is business investment that is much more valuable to the economy than government make-work programs.! Our neo-Keynesians now claim the effort failed only because it wasn’t ambitious enough—the sort of thinking that got Greece and Puerto Rico where they are today. Japan, too.

For all the money spent in the last massive stimulus, our roads are still a wreck. And that’s just existing roads—we need to build more roads and highways to keep up with the explosion of traffic volume. It isn’t a problem of having enough money, just what that money is used for. Hillary says she wants to spend like Eisenhower; even accounting for inflation the Obama administration has spent three times more on infrastructure than the entire $150~billon the interstate highway system cost to the interstate highway.

So where did all the money go? One answer is that billions of dollars of the money never actually went into roads but got siphoned off into welfare benefits, wind and solar energy projects such as Solyndra (which famously went bankrupt), and mass transit boondoggles such as the more than $60 billion California high-speed rail project few are likely to ever ride.

We don’t need more money for roads, we just need to spend on roads the money we already collect for them. The real transportation scandal is that Congress keeps taking almost 20 cents of every dollar drivers pay in gas taxes fund mass-transit projects, America needs a  massive network of pipelines to transport our increasing shale oil and gas output across the nation. Keystone XL and nearly a dozen other cross-country pipelines have been blocked by Obama’s regulators. Pipelines would mean jobs and lower fuel costs, but Hillary is so beholden to radical green groups that she has no intention of allowing them.

Don’t forget that the pipeline projects would be privately funded. By far the most important infrastructure in America is private spending on factories, plants, machinery, computers, fiber optic cables, satellites and the like. Private companies spend three to four times on infra-structure what the government does.

Hillary would make it worse by raising the capital gains tax to as high as 43 percent (the highest rate since the Jimmy Carter year). And she has no plans to cut corporate taxes. Business leaders consistently say these are the things strangling private-sector infrastructure investment.

source–weekly std, stephen moore, david malpass, chris edwars,


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