Monday, January 26, 2009

So-Called Stimulus

“Only in the upside-down world of Washington do people think that making government bigger is a recipe for economic growth.”

So begins Dan Mitchell of the Cato Institute in his latest mini-documentary discussing Obama’s stimulus plan. As you may have guessed, I agree.

As I wrote today, all of the proposed government spending is just a transfer of resources. There’s no net growth impact. We should be fighting the credit-deflationary recession with reduced tax rates and expanded money growth. Lower tax rates will address the downturn and expanded money growth will offset the credit problem. We don't need Bailout Nation. What we need is pro-growth tax policy.

In other words, Washington should be curbing its spending growth, not expanding it.