New Demands Versus the “New Deal”

President Obama is living in a dream. He seems to think that he and his government is entitled to a trillion dollars of our money with which to do whatever he pleases. His campaign rhetoric, demonizing the free market, is eerily similar to the rhetoric and strategy used by Franklin Roosevelt in the campaign of 1932. Perhaps President Obama fancies himself as our generation’s FDR.

Lack of government interference, or as he calls it “deregulation,” is to blame for our economic woes, he says. By vilifying private industry, he now seeks to convince the American people, just as FDR did, that government is the great savior that can lead us out of troubled economic times.

Excuse me for making such a bold claim, but he’s wrong, dead wrong. Private enterprise is in fact the one thing that can get us out of this crisis. It is only the creation of businesses, the expansion of business, entrepreneurship, and the private development of new technology that will create lasting jobs and prosperity.

In order to truly accomplish these things we can not take the same route that FDR took us through his “New Deal” program which, as any decent economist or historian will tell you, was a massive failure. We can not look to government as the solution to our problems.

Stimulus packages and bailouts (from any side of the aisle) will only perpetuate our problems by creating and injecting more unbacked currency into our economy. This “funny money” will only serve to drive the prices of goods and services up above their market value, perpetuating the series of financial bubbles that got us into this situation in the first place. I would hasten to add that this same policy of artificially keeping prices high was a key contributor to the perpetuation of the Great Depression.

So what should we do? First, we must allow the market to self-correct. Americans have lived beyond their means for years and in order to get our economy back in order, we will have to go through a period of both market and individual correction. We must learn to be financially responsible again.

Second, in the same way that we demand financial responsibility of ourselves, so too must we demand it of our government. It is time that we stand up and refuse to tolerate enormous budget deficits and a national debt of almost $11 trillion dollars. When we allow our government to spend as much as it wants and allow our Federal Reserve to print money unchecked, we invite future financial bubbles and crises. The stability of the dollar is critical to our economic future and we must stop its degradation by demanding more financial responsibility from our government.

Finally, we need a true tax cut, not just a check in the mail. How will a lump sum of extra money motivate companies into expanding and growing? The problem with such a “stimulus” is that there is nothing whatsoever to encourage any long-term investment. A way of doing this would be to remove tax barriers to companies making money. Yes that’s right, a tax rate cut to companies. This will encourage companies to make long-term investments, leading to an increase in production, thus creating jobs. In addition, invited by the prospect of higher business profits as a result of lower taxes, private investors’ confidence will be renewed, leading to a wave of reinvestment and rejuvenation for our economy. In short, it is less government interference, not more, that can lead us out of this crisis.

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