By MN Gordon
Lasting Debt
“Rule one: Never allow a crisis to go to waste,” said President Obama’s Chief of Staff Rahm Emanuel in November of 2008. “They are opportunities to do big things.”
Rahm Emanuel looks happy. He should be – he is the mayor of Chicago, which is best described as crisis incarnate. Or maybe the proper term is perma-crisis? Anyway, it undoubtedly looks like a giant opportunity from his perspective, a gift that keeps on giving, so to speak. [PT]
Photo credit: Ashlee Rezin / Sun-Times
At the time of his remark, Emanuel was eager to exploit the 2008 financial crisis to raid the public treasury. With the passage of the American Recovery and Reinvestment Act in February 2009, Emanuel’s wish was granted. The Obama administration had the opportunity to do big things.
Politically, the passage of the Recovery Act was a huge success. Washington was able to dole out funds to their preferred projects like never before. What could be better for a Congressman than to direct massive amounts of funds to infrastructure, healthcare, energy, security, law enforcement, and just about everything else?
Some Congressman even directed money to bridges and buildings that were then named after them. No doubt, this flattered their egos. But what it really did was memorialize their political swindle.
Economically, the Recovery Act was a great big dud. The money was frittered away without producing any lasting wealth. However, it did produce lasting debt. Since the Recovery Act’s passage, the U.S. national debt has nearly doubled from roughly $10.6 trillion to nearly $20 trillion.
The post-GFC economic recovery was not the weakest of the entire post-WW2 era despite all this money printing and deficit spending, but because of it. Government spending does not “help” the economy, it is a terrible burden on the economy. Every cent the government spends must be extracted from the private sector. Unless bureaucrats have magically found a way to gauge the opportunity costs of their spending, this is apodictically certain to damage the economy structurally and impoverish the citizenry at larger relative to what would have happened otherwise, as scarce capital is consumed and wasted. Not to mention that the stimulus spending was utterly riddled with crony favoritism and utterly ridiculous items, including $535 Million for Solyndra (a now bankrupt “alternative energy” company) to $384,949 for a Study of Duck Penises, to $100,000 for Anti-Capitalist Puppet Shows, $389,357 for College Students to Keep a Diary of Their Marijuana and Malt Liquor Use, while $1.3 million was spent for signs on highways to advertise that infrastructure spending was paid for by the stimulus. Countless more examples of this sort can be found. You couldn’t make this up if you tried. [PT] – clicki to enlarge.
Squib Kicking the Debt Ceiling Can
Several weeks ago we scribbled an article detailing why there will be no 11th hour debt ceiling deal. We thought we were really on to something. We even followed it up with a similarly themed article, calling Mitch McConnell’s debt ceiling bluff.
This week …read more
Source:: Acting Man
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