Friday, November 20, 2009

Is Reaganomics Enough?

Ryan and Hensarling's essay in today's WSJ has a few interesting facts.

Exhibit A is the economic stimulus package signed into law by President Barack Obama in February. Even among previous stimulus efforts, the 2009 stimulus stands out for its ineffective targeting and sheer size. With interest, it is $1.1 trillion, double the size of Roosevelt's New Deal spending as a percentage of GDP.

That was listed as one of the impairments to an imminent economic recovery. There are others, each significant in itself. (ObamaCare, Cap-n-Tax, and the tax-increase scheduled for 2011, not to mention the GM/Chrysler bailout-fiasco.)

Beyond instilling tremendous political uncertainty into economic decision-making, these policies ensure that deficits will shatter all previous records. In the Office of Management and Budget's 2009 Mid-Session Review, the administration projects a decade of deficits averaging 3.3 times the postwar norm of 1.8%. Yet its projections assume that interest rates will be less than half the postwar norm for interest rates, and that economic growth will be almost 10% higher than the high-growth 1980s. Never in the postwar era have such high deficits, low interest rates and high growth rates occurred simultaneously.

You could just say "Fantasyland" to describe Obama's economic projections. (The same name applies to his foreign policy, by the way.) Maybe he watched too much Disney while living in Indonesia?

Ryan and Hensarling make the case for Reaganomics.

Frankly, I don't think that's the solution any more, although it is a PART of a solution.

The solution lies in the 10th Amendments, folks. Reagan only did half the job he should have done. The other half lies in summary execution of about 40% of the Federal monster.

#10: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people

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