Tuesday, February 24, 2009

'Discarding Proven Medicine'

An editorial from Investor's Business Daily:
In confirming that he will let the Bush tax cuts expire, President Obama is discarding proven economic medicine. He is also bringing the discredited welfare state back to life, bigger than ever.
Obama's certainly is a new kind of presidency. Gone are the days when a president could look Congress and the American people in the eye and make a declaration like this: "We have worked to give the American people a smaller, less bureaucratic government in Washington. And we have to give the American people one that lives within its means. The era of big government is over."
But whoever said Barack Obama was Ronald Reagan? In fact, those were the words of one William Jefferson Clinton during his State of the Union address of 1996.
At the time, Clinton was preparing for a re-election campaign that would rely heavily on reform of one of the most unpopular federal government programs ever devised: welfare. He would claim in that re-election campaign that his first term as president proved him to be that rare thing: a Democrat with fiscal sanity. And in November of that year, the voters would believe him.
Now we are faced with a new president whose mission seems to be to prove that Ronald Reagan and Bill Clinton were both wrong. Reaganesque across-the-board tax cuts on income and investment, as this thinking goes, have only gotten us into an unprecedented global financial crisis (begging the question of how they did so much good for so long before finally making the sky fall).
Yet faced with this, the supposed risk of global depression, the federal government should go full steam astern, back to the wasteful, corrupt — and corrupting — practices that Democrat Bill Clinton got re-elected helping to end.
Heritage Foundation senior domestic policy analyst Robert Rector recently noted that the stimulus "will overturn the fiscal foundation of welfare reform . . . . For the first time since 1996, the federal government would begin paying states bonuses to increase their welfare caseloads."
Rector added that the new welfare system Obama would establish "is actually worse than the old AFDC (Aid to Families with Dependent Children) program because it rewards the states more heavily to increase their caseloads."
According to Rector, "Under the stimulus bills, the federal government will pay 80% of cost for each new family that a state enrolls in welfare . . . the original goal of helping families move to employment and self-sufficiency and off long-term dependence on government assistance has instead been replaced with the perverse incentive of adding more families to the welfare rolls."
Uncle Sam would actually pay the states many billions of dollars to increase their welfare caseloads. Rector sees welfare spending increases nearing $800 billion over a decade, with more than $1.3 trillion added to the national debt by the stimulus.
Yet amidst all this, the president promises to cut the budget deficit in half by the end of his first term — a promise Harvard economist Jeffrey Miron, appearing on CNN, disparaged as "wildly optimistic," especially since the massive, ever-expanding Social Security and Medicare entitlement programs are left unaddressed.
An economic rescue entailing ratcheting up income taxes and ballooning the government runs counter to Reagan's, Clinton's and even John F. Kennedy's governing philosophy. Does President Obama really think his 65-bucks-a-month tax cut will make up for it all?

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