Conservatives and libertarians seem to be reeling, as economic freedom takes another blow from both the outgoing and incoming administrations every day. Remember the good old days of the $1.5 billion Chrysler bailout? Heck, remember the good old days of the $700 billion financial market bailout? Barack Obama used to call for fiscal discipline and denounce “the runaway spending and the record deficits.” Now it seems the sky’s the limit. Pundits talk about whether Obama’s first deficit will come in closer to $1 trillion or $1.5 trillion, and Republican opponents are nowhere to be seen.
Throwing fiscal discipline to the winds, in his radio address Saturday Obama proposed the biggest expansion of government spending in history, ranging from roads and bridges to “a range of programs to expand broadband Internet access, to make government buildings more energy efficient, to improve information technology at hospitals and doctors’ offices, and to upgrade computers in schools.” I just hope Republicans and Blue Dog Democrats were reading the New York Times on Sunday, which actually explained the argument against such programs in its front-page news story:
Mr. Obama’s plan, if enacted, would be in part a government-directed industrial policy, with lawmakers and administration officials picking winners and losers among private projects and raining large amounts of taxpayer money on them….
President Bush and many conservative economists have opposed such large-scale government intervention in the economy because it supports enterprises that might not survive in a free market. That is the crux of the argument against a government bailout of the auto industry….
Mr. Bush and other Republicans have resisted such an approach in part out of concern for the already soaring federal budget deficit, which could easily hit $1 trillion this year. Borrowing hundreds of billions of dollars today to try to fix the economy, they argue, will leave a huge bill for the next generation.
Conservative economists have also long derided public works spending as a poor response to tough economic times, saying it has not been a reliable catalyst for short-term growth and instead is more about politicians gaining points with constituents.
Alan D. Viard, an economist at the American Enterprise Institute, told the House Ways and Means Committee recently that public works spending should not be authorized out of the “illusory hope of job gains or economic stabilization.”
“If more money is spent on infrastructure, more workers will be employed in that sector,” Mr. Viard added. “In the long run, however, an increase in infrastructure spending requires a reduction in public or private spending for other goods and services. As a result, fewer workers are employed in other sectors of the economy.”
Such warnings don’t carry much weight when they come from President Bush, the trillion-dollar man. But fiscally responsible Republicans and Democrats would do well to read the Times article and start actually making these points. And kudos to Times reporters Peter Baker and John Broder for including such balance in their story.