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Arthur Laffer: cuts succeeded where stimulus failed - Austerity Works
The Spectator UK ^ | October 26, 2013 | Arthur Laffer

Posted on 10/25/2013 3:02:03 AM PDT by Cincinatus' Wife

America has shown that stimulus is pointless — how can a poor person spend himself to prosperity?

All the drama coming out of Washington in the last few weeks has obscured some seriously good news: federal government spending is falling. And not at a trickle: think the White Cliffs of Dover. Not since the economic boom following 1945 have Americans seen such a rapid decline in the government’s claim on the nation’s resources — falling by a welcome $94 billion over two years. You need to go back to the end of the Korean war to find a time when US government spending has actually declined over two years. If Republicans in the House stick to the sequester and future caps already built into current budget law, federal spending will stay at this low level for years to come.

For liberals who thought that Barack Obama’s second term would mean a new multi-trillion-dollar Great Society spending binge, such as we saw from 2009 to 2011, all this is a cold shower of fiscal reality. For Keynesians who believe that government spending cuts are ‘austerity’, this is also miserable news: they expect the worst. But the signs are that this contraction in the size of government is a big plus for the American economy. It’s now happening much more quickly here than it is in Britain. Americans are moving faster towards fiscal sanity — and are already feeling the benefit.

It is clear, now, that a massive stimulus administered was an abject failure. It condemned America to the worst recovery in its history — including the 1930s. But when politicians make decisions while either panicked or drunk, the consequences are rarely edifying or attractive. US Treasury secretary Hank Paulson hyperventilating before Congress to pass his three-page stimulus bill granting him total authority to spend $700 billion to save the economy was a sight to behold. Why, he even insisted the need was so urgent that there was no time for hearings, reviews or oversight. And passed it was — with some $2.8 trillion additional stimulus funds over the coming few years. And what happened? American unemployment levels soared. Continued


TOPICS: Business/Economy; Editorial; Government; Politics/Elections
KEYWORDS: economy; sequester; spending; stimulus; taxes

1 posted on 10/25/2013 3:02:03 AM PDT by Cincinatus' Wife
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To: Cincinatus' Wife
But when politicians make decisions while either panicked or drunk,

Is there any other way?

2 posted on 10/25/2013 3:06:53 AM PDT by glorgau
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To: Cincinatus' Wife

A liberal will never admit that you’ve won an argument. They will respond that it didn’t work because YOU fought it, or we didn’t spend ENOUGH money, or the wrong people were in charge. Possibly it failed due to racism, obstructionism or radical counterrevolutionaries. If all else fails to convince you, it was Bush, Cheney, Halliburton, Glen Beck or talk radio.


3 posted on 10/25/2013 3:36:46 AM PDT by Gen.Blather
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To: Cincinatus' Wife

Good article.

Keynesian “economics” makes absolutely no sense. It seems to have been created to give an academic veneer to socialist redistributionist policies—but attempting to do that is like using the language of science to describe astrology. It simply cannot work.

Unfortunately, mathematically and logically challenged socialists who fantasize about achieving a utopia where no one works and wealth magically flows from “the rich” keep on trotting out Keynes. No number of Keynesian failures can change their mind—Keynesianism *must* work because they want it to work.


4 posted on 10/25/2013 3:43:20 AM PDT by exDemMom (Current visual of the hole the US continues to dig itself into: http://www.usdebtclock.org/)
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To: Cincinatus' Wife

Bookmark.


5 posted on 10/25/2013 3:57:53 AM PDT by SunTzuWu
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To: exDemMom

“Work” is the only wealth mankind has ever had, or ever will. Without it, nothing else has any value whatsoever.


6 posted on 10/25/2013 4:14:31 AM PDT by abb
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To: abb

Indeed. In the natural world, it is impossible to survive without work.


7 posted on 10/25/2013 4:24:24 AM PDT by exDemMom (Current visual of the hole the US continues to dig itself into: http://www.usdebtclock.org/)
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To: glorgau

The desire to be re-elected. That’s the most important factor in the corruption of our entire political system. We need term limits.


8 posted on 10/25/2013 4:32:46 AM PDT by SC_Pete
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To: Cincinatus' Wife
federal government spending is falling. And not at a trickle: think the White Cliffs of Dover. Not since the economic boom following 1945 have Americans seen such a rapid decline in the government’s claim on the nation’s resources — falling by a welcome $94 billion over two years.

Sorry, but $94B is a trickle. It's a welcome trickle, but it's still only 2.4% of a shockingly bloated budget. [Dividing all amounts by 100 million and equating the result to a low-skill family's budget:] It's equivalent to someone making $27k a year and spending $38k a year cutting his spending to $37k a year. It's nice that he's not spending $40k a year, as planned, but the result is still a reckless and irresponsible financial train wreck, rather than a wholesale change in behavior.

9 posted on 10/25/2013 6:52:32 AM PDT by Pollster1 ("Shall not be infringed" is unambiguous.)
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To: Cincinatus' Wife; All

Too bad he doesn’t feel the same way about austerity when it comes to Illegal Alien Amnesty....Laffer supports the Senate multi-trillion dollar Amnesty bill

So tired of these “Fiscal Conservatives” who claim lower taxes yet support taxpayer funded Amnesty. Fiscal Conservatives are usually neither


10 posted on 10/25/2013 9:06:42 AM PDT by SeminoleCounty (Fact Is: GOPe want ObamaCare.)
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To: Cincinatus' Wife
Ah, the welcome breeze of sanity and sense from Laffer. He's a national treasure.
11 posted on 10/25/2013 2:47:57 PM PDT by jdsteel (Give me freedom, not more government.)
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