BLOGS FROM SIDNEY

In the Mirror

Riley

The G20 Summit: A Message Misunderstood

Blog From
June 30th, 2010

The G20 Summit ended on Sunday with a basic disagreement on how to restore global financial health. Or, in other words, how in the world to get us out of the worldwide recession. Do countries spend their way out or cut their way out? The cutting idea comes into play because nations are deep in debt as well as deep in recession. Among the big countries, the U.S. is alone in preferring to spend our way out of the recession. The others favor severely cutting back on debt.

We can’t have it both ways and I guess the spending-to-economic-health deal would be a good one if it actually worked. And maybe it does. In theory. But, in practice, or at least as Obama practices it, all we’ve gotten is deeper in debt with no sign of letting up. In fact, under his proposed budgets, Obama will double the Bush deficits in the same time period. At that rate, we’ll be toast by 2020.

But, 2020 is not the point of this discussion. It’s the fact that spending, Obama’s big recession killer, isn’t getting the job done. Even proponents of the Stimulus admit that the recovery has been “shallow”. I’ll say. Take a look at the series of reports on this year’s first quarter economic “growth”, for example. The first reports were modest but encouraging. The second set revised the results downward to pretty much flat. The third, and latest, reports, lower the results even further. All the way down to “disappointing” and “unexpected”, words we hear a lot now days.

So, we’re getting all the Summer of Recovery hype. But not much about why the first 18 months of recovery haven’t ignited the booster rockets. Here are a couple of ideas. First off, the government can’t figure out how to spend money in a way that makes sense. This whole spending failure part of it is Sidney’s latest blog. So, let’s skip to the second idea. The crush of all those micromanaging reforms, which, translated, mean higher taxes and increased regulation to the point of stifling economic recovery.

Look at just two sectors invaded by the micromanagers, healthcare and industry. Obamacare’s cost to taxpayers and its negative impact on healthcare processes will be devastating, if the essentially identical Massachusetts law is any example.

And industry? The Business Roundtable, consisting of the leaders of some of the largest companies in the country, advises Obama and his aides on economic recovery. Last week, members protested the “increasingly hostile” industry environment Obama’s decisions have created, particularly regarding growth and job creation. In support of the protest, the Roundtable itemized hundreds of separate White House actions and decisions that stifle productivity and job growth. The protest has fallen on deaf ears.

Why do so many politicians ignore the persistent failure of large-scale government programs? You’d think the recent Social Security, Medicare and Fannie and Freddie face-plants would be enough to discourage further federal forays into overreaching control. But, those lessons are either lost or ignored.

Which brings us back to the G20 Summit. While spending may end recession and reducing it may ease debt, spending that merely deepens debt is a fool’s choice.

See you in the mirror.


 





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