Pundits are restless, an election looms – so this week, President Barack Obama is proposing yet another round of special favors, aimed at improving the economy. Prominent columnist Paul Krugman wants the plans to be “bold” and to involve huge amounts of money. Here’s a contrasting view: government should stop declaring recovery plans, bold or otherwise.
Maybe the constant announcing of new plans – especially plans backed by borrowing or tax cuts – is, itself, an impediment to economic growth.
Two years ago this month saw the beginning of the financial-sector meltdown that is the primary feature of the current high-unemployment, slow-growth mess. Since then, Republican and Democratic presidents and Treasury Secretaries alike have announced bold plan after bold plan after bold plan. Often the plans change week-to-week. Many of the plans are just political talking points, with no follow-through. Many are mutually contradictory, like advocating tax cuts and tax increases simultaneously.
Here’s what the endless succession of plans has in common – they haven’t worked. If something hasn’t worked, why does this cause us to think more of the same is required? The White House, Treasury Department and Congress should stop contemplating new plans.
Endless emphasis at high political levels on the need to “do something,” if only to appease the press, communicates the message that U.S. leadership is either panicky or has no idea what’s going on or both. When leaders act perpetually panicked, voters and business managers become nervous. Voters want new leaders and business managers put off decisions until they have a better idea what may happen next. The result, for the economy, is slower growth than the mainly good world situation — no resource shortages, low international tensions, rising education levels, liberalizing trade – would seem to suggest.