November 5, 2009

November 5, 2009 | Commentary on Budget and Spending

Why Spending Won't Grow Our Economy

"The problem with socialism is that you eventually run out of other people's money" - Margaret Thatcher

With our country in the midst of a recession, it's easy to forget the obvious: We still live in the most prosperous and influential country in history.

Unfortunately, Congress and the Obama administration are putting our country in a perilous path: massively increasing government spending while adding to our national deficit. Worse yet, our government is choosing to side with labor unions instead of opening our economy to the rest of the world through free-trade agreements. Will our country be able to change course before it's too late?

Since taking office, President Barack Obama has overseen one of the most massive government spending sprees in our country's history. Including the so-called "stimulus bill," (price tag: $787 billion) Congress will spend more than $3.6 trillion this year. Congress' generosity has extended to rescuing everyone from Wall Street to the auto industry. In short, Congress has been hard pressed to refuse anyone who asks for federal money.

Worse, Congress is eyeing even more expensive undertakings: Many liberal lawmakers aim to "reform" our health insurance and energy industries.

On health care, Congress' proposals are falling short on real reform. Instead of empowering individuals and increasing consumer choice, congressional committees have opted for costly plans that would put the government -- instead of individuals -- behind the steering wheel, thus preventing real choice and competition.

And although health care reform has dominated the headlines during the last few months, a powerful few in Congress are also quietly pushing for an elaborate cap-and-trade system that would impose taxes on countless small businesses and individuals.

It's no surprise that saving is never as popular as spending. But while lawmakers may think they're winning popularity contests, they should also ask: Is this approach really best for our country?

As it is, the nation's rising deficit is forcing us to borrow money from overseas -- especially China. While borrowing money from other countries is not necessarily a bad thing, working to balance the budget while limiting the national deficit would undoubtedly be a better move. Additionally, history reminds us how the once mighty British economy gradually began to shrink when the country stopped being credit issuers and became credit seekers.

In short, we cannot take our immense wealth for granted. We cannot assume that our country's prosperity -- and the influence that comes with it -- is automatic. Congress and this administration will be judged on whether they ensure their policy decisions maintain our global standing.

Congress should curb its free-spending ways and seriously consider better ways to grow our economy. For starters, Congress should look at reforming the gargantuan entitlement programs -- including Medicare, Social Security and Medicaid -- that are on a path to bankrupt our country.

Also, Congress should look at ways to encourage productivity by lowering tax rates to spur growth and creativity, which is one of the central engines of our economy. Otherwise, Congress' arrogance and complacency could be the recipe for our undoing.

Israel Ortega is a Senior Media Services Associate at The Heritage Foundation.

About the Author

Israel Ortega Contributor, The Foundry
Accounting

Related Issues: Budget and Spending

First Appeared in MetroLatino USA