Infrastructure!

Yet again, President Obama is calling for more spending on infrastructure.  The $800 billion stimulus was such a glowing success (it projected an unemployment rate under 5% by now) despite the president eventually admitted, somewhat sheepishly, that shovel ready wasn't as shovel ready as he thought.  Better still, he says that additional spending won't add a dime to the deficit.  Sigh.  Really?  Is he going to sell this same snake oil again?  The only good thing about this new stimulus plan is that it is a tiny fraction ($21 billion) of the original.

 

As I have mentioned before, the government has no money.  Every dime that the government spends, it must first extract from taxpayers.  Now, if that money was left with those taxpayers, what would they do with it?  Presumably they would spend it, save it, or invest it.  And since it is the taxpayer's money, he will probably use it wisely to get value for his money (i.e. he probably won't fund a Star Trek parody like the IRS did, or fund a lavish Las Vegas conference like the GAO, etc.).

 

Imagine a man with two wallets: one in his right pocket (we'll call that his private wallet) and one in his left pocket (we'll call that his government wallet).  If he transfers half the money from his private wallet to his government wallet, then stimulates his private wallet by transferring money from his government wallet, is he richer?  Obviously not, but politicians will argue otherwise, because they control the government wallet.  The government cannot create wealth, only transfer it.  All wealth creation must come from the private sector.

 

How does this added spending not add to the deficit?  If you spend more, the deficit must rise.  It is like saying we will add 5 to 100 but the result will be 100, not 105.  Huh?  Are we subtracting 5 somewhere along the line?  No.  Is there a tax increase of 5 to make up for the added spending? No.  Then the deficit MUST go up.  As the president has said on other subjects, it's simple math.