Not Now, Not Ever

“We have tried spending money. We are spending more than we have ever spent before and it does not work.” A Republican senator in 2010? No, these are the words of FDR's Secretary of the Treasury Henry Morgenthau before the House Ways and Means Committee in 1939, 7 years after FDR took office, confessing the failure of Keynesian economics and the Roosevelt Administration's approach to solving the Great Depression. Indeed, it was only WW II that pulled the U.S. out of the doldrums. And it has not worked any better in 2009-2010.
www.humanevents.com/article.php?id=30331

To get an accurate look at the current performance of the American economy, let's turn to a British newspaper. www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html Some statistics jump off the page at you: the U.S. workforce contracted by 652,000 jobs in June, one of the sharpest contractions ever; home sales down, retail sales down, factory orders dropped at their fastest rate since March 2009; the percentage of the working-age population shrank from 58.7% to 58.5%; 8 million jobs have been lost. (Joe Biden has said, incidentally, that we will never get those jobs back). Quoting Democratic economist and Clinton Secretary of Labor, Robert Reich:

"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

Wrong booster rockets!

The Democrats have spent $862 BILLION in stimulus (Keynesian) spending to get the economy moving and it hasn't worked because it is the private sector that creates wealth and it is tax and monetary policy that the private sector responds to. If businesses know that they are going to be able to keep more of their money over the long term, then they will spend to add equipment and employees. They simply will not take the risk, however, and then give the profits to the government in the form of taxes. Unfortunately, most of the Bush tax cuts are due to expire this year and taxes will head up much higher than they are today. Jobs, investment in plants and equipment? Hah! Strap in because this is going to be a rough, long and nasty recession because a majority of the powers that be are too ideologically invested to take the necessary steps to get us out of it.