In recent discussions, President Obama’s latest jobs proposal has garnered attention, but not for the reasons one might expect. While the anticipated benefits were scarce, many were still left disillusioned by the proposal’s tangible shortcomings and lack of viability.
The most striking aspect of this jobs plan isn’t its content—it’s the underlying belief that government can effectively utilize borrowed funds to invigorate the economy. Such a notion, if valid, would imply that the trillions already expended would have resulted in a robust economic rejuvenation marked by job creation and lowered unemployment. Yet, as evidenced by a recent Bloomberg National Poll, only 9 percent of Americans feel confident that the economy will avoid slipping back into recession.
While the government excels at spending borrowed money, there is no credible evidence to suggest that this approach stimulates economic growth. In fact, simple reasoning indicates that it may do the opposite. When the government injects borrowed funds into selective projects, it diverts resources from the private sector, ultimately depriving the economy of vital capital. Moreover, many government-favored projects—such as infrastructure and school construction—fail to generate sustainable, self-sufficient jobs. Consequently, once the financial resources run dry, the economy often falters.
This Economy Bites
As government spending escalates, private enterprises—which are pivotal for creating genuine wealth and jobs—find themselves deprived of necessary capital. This misallocation exacerbates the national debt and stunts economic growth, leading to diminished tax revenues for future budgeting. Many opportunities for new jobs and innovations remain unrealized as a result.
With leaders like Obama at the helm, the economy is trapped in a damaging cycle: increasing borrowed government spending intended to bolster growth only serves to further hinder it. Thus, to remedy an ailing economy, the government opts for more spending, resulting in deeper economic troubles.
This represents the reality we currently face, and it’s undeniably frustrating. Until government-sponsored job initiatives, stimulus plans, and deficit spending policies are halted, this pattern will persist.
Using borrowed money for government spending does not yield economic growth. The extensive stimulus programs initiated since 2008 illustrate how ineffective such spending can be. Instead, the focus should shift toward fostering savings and investment in private capital.
In addition to these ineffective fiscal policies, the Federal Reserve is exacerbating the situation through its monetary policies. By keeping interest rates artificially low, the Fed hopes to incite a spending boom. However, these low interest rates discourage saving and encourage speculation, which can lead to market bubbles.
Consider the current landscape…
The Economic Shredding Machine
Financial markets have become increasingly volatile, and a major crisis could unfold at any time. The economy seems to be languishing, and the next financial downturn could induce a complete collapse.
According to the Census Bureau, as of Tuesday, 46.2 million Americans live below the official poverty line—the highest figure in 52 years. Moreover, the middle class is facing significant challenges. Median household incomes have plummeted to levels not seen since 1996, indicating that after 14 years of hard work, the middle class has little to show for their struggles.
This reality is undoubtedly discouraging. It used to be that perseverance and hard work paid off over time, but it appears that such assurances are diminishing for many.
If you’ve recently lost your job, don’t take it personally—it’s a tough economy, and many good individuals are experiencing similar hardships. Nevertheless, don’t give up. Remember, you can only fail if you stop trying.
Sincerely,
MN Gordon
for Economic Prism
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