Five Democrat governors including New Jersey’s Jon Corzine and New York’s David Paterson have called upon the incoming Obama administration to spend $1 trillion over the next two years on a host of programs such as public education, roads, and social services. The governors also want a middle-class tax cut as part of their “stimulus proposal.” The spectacle of these governors literally begging for federal dollars so they can maintain their respective welfare states is another shameful episode in our nation’s history.
Big government advocates like Corzine and others claim the “people” really want a welfare state to take care of low income families, provide numerous social services for middle income families, and maintain an expensive public school system. If they are correct, then the people should be willing-unequivocally–to pay higher taxes to support a comprehensive welfare state. Corzine, Paterson, et. al., should immediately increase taxes on everyone in their states if they believe the people want to maintain the welfare state in New Jersey, New York, Massachusetts, Ohio and Wisconsin.
Instead of calling upon their citizens to pay more in taxes to support big government policies, the governors are asking the (bankrupt) federal government to borrow another one trillion dollars to pay for their current expenses. In New Jersey, the state Supreme Court ruled several years ago that borrowing to pay for current expenses is unconstitutional. Corzine and his blue state counterparts want the federal government to increase the national debt so they can maintain the financially unsustainable welfare state. Talk about passing the buck.
The federal government can issue all the debt it wants because the Federal Reserve stands ready to purchase all the U.S. Treasury securities that are not scooped up by foreigners and Americans. The nation’s blue state governors therefore are now looking for the federal government to provide them with the ultimate free lunch–foregoing state tax hikes so they can maintain government spending during this economic depression.
Governors claim that spending on infrastructure would “create” jobs and “stimulate” state economies throughout the country. Nonsense. Road and highway projects do not “stimulate” the economy. An economy does not need stimulation. Economies need freedom to create prosperity and therefore jobs.
Government “stimulation” is at best a one shot benefit to the economy (actually to the beneficiaries of the government’s largesse) unless the federal government continues to spend money it doesn’t have and run huge deficits year after year. This is a recipe for accelerating inflation as the Fed would undoubtedly print up the money to buy the Treasury’s debt.
More federal government debt and monetary inflation rob the people of their purchasing power. The very people Corzine, Patterson and others want to help with their stimulus plan would actually harm them because their standard of living would fall the most in the ensuing inflationary cycle.
As Ludwig von Mises wrote decades ago: “The government and its chiefs do not have the powers of the mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others.” Mises also observed, “Daily experience proves clearly to everybody but the most bigoted fanatics of socialism that governmental management is inefficient and wasteful.”
Mises and other economists who have been waging an intellectual battle against fascism, socialism, interventionism and inflationism have been ignored by the statists who have held power in DC and the state capitals for most of the past 100 years. And when the economy implodes as it does periodically because of the Federal Reserve’s easy money policies, the free market becomes the whipping boy for the collectivists in and out of government.
Corzine, Paterson, and the other governors as well as President-elect Obama should consult Mises’s works so they can learn The Lesson: Free markets, low taxes, less regulation, less government spending, and no imperial foreign policy, guarantee prosperity. America’s welfare-warfare state guarantees misery, inflation, and untold deaths and the maiming of both innocents abroad and of our brave men and women in uniform who are being used to preserve the military-industrial complex.