Why Don't Politicians Learn from History?

By Mike Griffith, Staff Writer

Ignoring the lessons of history, over the last twelve months our politicians have been trying to jolt the economy back to prosperity by borrowing and spending nearly $700 billion of our tax dollars (the Obama stimulus bill spent about $530 billion, and the Bush stimulus bill spent about $150 billion).  Why don’t our politicians learn from history that no nation has ever borrowed and spent its way to prosperity?  Didn’t we learn from the Bush years that prolonged runaway spending can cancel out tax cuts, balloon the deficit, increase the national debt, and eventually cause an economic slowdown (or make an economic slowdown caused by other factors even worse)?

Tax cuts always end up paying for themselves, but spending must be restrained when you cut taxes or else you end up running a deficit and adding to the national debt.  Worse still, the Obama tax cuts are only a fraction of the Bush tax cuts, and Obama’s new spending dwarfs Bush’s new spending for any year of his administration.  So this is a recipe for more debt and deficit spending, and eventually for more trouble for our economy.

We should learn from Japan’s recent experience with the borrow-and-spend approach.  In the 1990s Japan also tried to borrow and spend its way out of a recession.  In fact, Japan spent nearly five times as much as our politicians are now spending, and it still didn’t work, leading the 1990s to be dubbed Japan’s "lost decade."

Barack Obama-san
http://online.wsj.com/article/SB122938932478509075.html 

Japan’s Lost Decade
http://www.aei.org/outlook/27568 

Japan’s Lost Decade Argues Against Obama’s Policies
http://www.realclearmarkets.com/articles/2009/02/japans_lost_decade_argues_agai.html 

Learning from Japan
http://www.heritage.org/research/economy/bg2222.cfm 

More Transportation Spending: False Promises of Prosperity and Job Creation
http://www.heritage.org/Research/budget/bg2121.cfm

When the Obama stimulus bill was being debated in Congress, over 200 economists signed a full-page ad in the New York Times noting that New-Deal-style government spending did not end Japan’s recession and did not pull us out of the Great Depression.  They said:

        More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth. (http://www.cato.org/special/stimulus09/cato_stimulus.pdf)

The implications of the stimulus bill for our national debt, not to mention our indebtedness to foreign nations, are chilling:  We are now piling a staggering amount of debt onto our children and grandchildren.  Some day this bill will have to be paid, and when that bill comes due things won’t be pretty.  Our kids and grandkids will wonder how we could have been so irresponsible.

Who Will Fund Obama’s Stimulus Spending?
http://www.aier.org/research/commentaries/1105-will-foreigners-bailout-obamas-stimulus-spending

And as for the New Deal and the Great Depression, one only has to look at the unemployment rate and GDP growth from 1932 to 1945 to see that the New Deal did not end the Great Depression.  Many economists, in fact, now argue that the New Deal prolonged the Great Depression by several years. 

Myths About the New Deal, FDR, and Hoover
http://www.geocities.com/mtgriffith1/newdealmyths.htm

John Kennedy understood that you can’t borrow and spend your way out of a recession.  History has proven this over and over again.  Why don’t, or won’t, more of our politicians learn this vital lesson of history?

Another lesson of history that our politicians refuse to learn is that you can’t tax your way to prosperity either.  Higher, burdensome taxes consistently lead to reduced growth and to bigger and bigger government, especially when you impose undue tax burdens on the job-producing sector of your economy.

Debunking Liberal Myths About Tax Cuts and the Economy
http://www.geocities.com/mtgriffith1/taxcutmyths.htm

Eventually, all this borrowed and printed money flooding into the economy will have a temporary stimulative effect.  Things will get better for a while.  It will be the same sort of illusionary "prosperity" that a fiscally unwise family that is deep in debt experiences after maxing out a couple new credit cards.  Life will seem good again, for a time.  But, before long the mountain of debt, the devaluation of our currency, the heavy tax load, and the fiscal burden imposed by the deficit and by the interest on the national debt–before long these things will take their toll and the economy will start to get worse again.

If we want fiscal sanity and genuine prosperity, we’re going to have to return to the traditional American principles of low taxes, free markets, and limited government.

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