1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.
Fiscal crises have a predictable pattern.
Step 1 occurs when the economy is prospering and tax revenues are growing faster than forecast.
Step 2 is when politicians use the additional money to increase government spending.
Obama Speaks to the Muslim World
Recently on Leno, President Obama compared some financial products to an exploding toaster. His words:
G-20 Summit Agrees to International Spending Plan
If you’re looking for something scary to do on Halloween, check out Cato senior fellow Johan Norberg’s documentary, “Europe’s Debt: America’s Crisis?” on PBS stations across the country.
The central economic selling point of the Obama reelection team is that the president saved the U.S. auto industry. That such a contestable proposition serves as the administration’s economic headline does more to underscore its abysmal record than to inspire confidence in its continued economic stewardship.