The last time our nation enjoyed a budget surplus was under President Bill Clinton, a fact that Democrats find convenient to remind us of frequently. Still, the former President has written an important article in the current (June 27) issue of Newsweek magazine, where he lists fourteen ways to create jobs in America. Some are legitimate and worthy of immediate implementation. But, some of his ideas suggest that he doesn't recognize the new reality that governing with debt is like playing baseball in a straight-jacket.
He said "we could put a million people to work retrofitting buildings all over America." Undoubtedly, he is right, and the WPA projects during the Great Depression were also great job creaters as well. I wish we could take Clinton's advice now, but the U.S. can no longer afford his advice. We could have taken his advice when America had relatively little debt but cannot afford that now.
His article reflects his Keynesian thinking, i.e., that governments should stimulate the economy to get out of recessions. Like most Keynesians, he forgets that Keynes was a strong believer in balancing the budget over the economic cycle. In other words, Keynes advocated running a suplus during good years and reducing debt, as President Clinton actually did.
But, after a decade of fighting two expensive faraway wars, after a huge unfunded prescription drug program, after two tax cuts, along with an aging population consuming more Social Security and Medicare dollars of taxpayers, we have forfeited any legitimate right to use half of Keynes' argument to use deficit spending to get us out of this mess.
Obama's stimulus plan delayed the inevitable loss of many jobs, such as teachers and police officers, but created very few jobs. No additional stimulus by using borrowed money is available to us now, either financially or politically. While there are reasonable economic reasons to reduce corporate tax levels now, it makes zero sense to give high-income earners another tax break. It is time for Austrian economics, which means austerity for those who can least afford it . . . a morally uncomfortable and inconvenient truth.
