Why redistribution impoverishes everyone 109

 Donald Lambro in Townhall criticizes Obama’s ‘solution’ to the economic crisis, the plan for massive infrastructure spending.  Read the whole article here

What exactly is the theory behind spending stimulus bills? Can the federal government miraculously spend money on public-works jobs and, thus, jumpstart a $14 trillion private economy?

Listen to fiscal policy analyst Brian Riedl of the Heritage Foundation: "Government stimulus bills are based on the idea that Congress can ‘inject’ new money into the economy, increasing demand and thus production. But where does government get this money? Congress does not have a vault of money waiting to be distributed. Every dollar Congress ‘injects’ into the economy must first be taxed or borrowed out of the economy," Riedl says.

But every dollar taken out of the economy is one dollar less that the economy has to spend to build businesses, produce goods and services and hire more workers. That means fewer jobs, a lower savings rate, less investment and ultimately a weaker economy. "No new spending power is created. It’s merely redistributed from one group of people to another," Riedl says.

Posted under Commentary by Jillian Becker on Tuesday, December 23, 2008

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