Yesterday, Vicki reported on the amazing estimates of the US debt burden, once unfunded liabilities are added to the equation.
Today, headlines are announcing the troubling news that our economy grew at only a 1.7 percent rate in the second quarter, and that last quarter was even worse than we thought, growing at a 1.1 percent rate.
Such low economic growth means that we are not on the path to correcting our stubborn employment problem, with so many Americans out of work or under-employed. It also means that Americans cannot incomes to rise or their family budget problems to abate since the economic pie isn’t getting much bigger. And as a nation, we can’t expect the government’s finances to be getting better, since low economic growth means low tax revenue.
Most worryingly, this pathetic level of growth comes in spite of an aggressive monetary policy meant to stimulate growth and unsustainable levels of deficit spending. This is getting the diagnosis of an illness after you've already tried the expert recommended treatment. Indeed, the President had justified the trillion dollar “stimulus” efforts and ongoing high-levels of government “investment” in the economy as necessary to get the economy growing again. That hasn’t happened.
Undoubtedly Krugman-types will say that the real problem is government isn’t spending enough and we need more deficit spending. This is a risky path to take. After all, how much more debt can we take on (see Greece, Detroit, etc)? After all, all this debt needs to be financed – which means that a growing share of our taxes are going to interest payment, rather than to all the “investments” that those on the Left love.
It’s time for a new approach, a new course of treatment. We need to look at ways to really encourage growth. We should be reducing burdensome regulations on job-creators (ObamaCare anyone?), a policy effort that wouldn’t even reduce government revenue.
Too bad the President is determined to continue making it harder for businesses to create jobs and to continue issuing more government debt to "invest" in boondoogles (like “green energy” jobs projects that never lead to any real jobs). Perhaps more than a change in economic policy, what we really need is a change in leadership.