Will also comments on the Keynesian economic theory being used to fight against sequestration.
Obama, who believes government spends money more constructively than do those who earn it, warns that the sequester’s budgetary nicks, amounting to one-half of 1 percent of gross domestic product, will derail the economy. A similar jeremiad was heard in 1943 when economist Paul Samuelson, whose Keynesian assumptions have trickled down to Obama, said postwar cuts in government would mean “the greatest period of unemployment and industrial dislocation which any economy has ever faced.” Federal spending did indeed shrink an enormous 40 percent in one year. And the economy boomed.
Amen. I’ve already cited a Cato study on this topic, which shows that the Keynesians were wildly wrong in their predictions of post-war economic collapse.
And the Wall Street Journal also has opined on this topic, showing not only that lawmakers wisely rejected another round of Keynesian foolishness, but also that post-war tax cuts were one of the reasons why the economy quickly rebounded.
Let’s close with some more mockery of the clowns in Washington.
This Gary Varvel cartoon shows what’s happening, though I’ve would have drawn Chicken Little to resemble Obama.
But what about the second frame of the cartoon? If the sequester happens, will the statists be forced to admit that they were creating false fears in hopes of protecting their spots at the federal trough?
As reported in the Washington Post, one of them is very worried about this possible outcome.
“…The bad news is, the world doesn’t end March 2,” said Emily Holubowich, a Washington health-care lobbyist who leads a coalition of 3,000 nonprofit groups fighting the cuts. “The worst-case scenario for us is the sequester hits and nothing bad really happens. And Republicans say: See, that wasn’t so bad.”
Since the sequester takes effect on March 1, we’ll soon find out.
Some bureaucracies will deliberately try to make the sequester as inconvenient and painful as possible for the American people. As I said in this Larry Kudlow interview, the heads of those agencies should be fired.
Of course, Obama will probably try to reward them, but those who favor responsible fiscal policy should do everything possible to expose the shameful game being played by these political hacks.