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Source link: http://archive.mises.org/9338/turning-stones-into-bread-obamas-costly-stimulus-experiment/

Turning Stones into Bread: Obama’s Costly Stimulus Experiment

January 30, 2009 by

Obama’s “stimulus” package that has passed the House with a price tag of $820 billion and is now working it’s way through the Senate with price tag of $900 billion (or more), will likely be the one of the largest single interventionist programs by the government outside of war.

I discuss this in a new article of mine on, “Obama’s Costly Government Experiment.”

If the $825 billion “stimulus” package was a separate country, it would have the 15th largest Gross Domestic Product in the world, right before Australia!

The Census Bureau estimates that in 2007 the median household income in the U.S. was slightly more than $50,000. Just for the sake of argument, if half of the stimulus package actually “created” the 4 million jobs through government spending that Obama talks about this would mean that each of those jobs would have cost $100,000 to bring into existance — or double the median household income in America!

The Congressional Budget Office (CBO) has estimated that the Federal government will be running a budget deficit in the current fiscal year of at least $1.5 trillion, which Uncle Sam will have to fund through borrowing (or money creation).

With around 305 million people in the U.S. this means an additional per capita debt budren on the American citizenry of around $4,900. The IRS says that there are about 140 million income-earning taxpayers in the U.S. This means that their additional per capita debt burden will be around $10,700.

(And, of course, this is ignoring the interest charges on this extra Federal debt for which taxpayers will be expected to cough up the cash.)

The “stimulus” package being weaved together by Obama and the Congress will be a giant, costly — and in reality wasteful and counter-productive — exercise in the absurd idea that government can manage the economy and produce the Keynesian “miracle” of turning “Stones into Bread” (as Ludwig von Mises called it many years ago).

Richard Ebeling

{ 5 comments }

theblob January 30, 2009 at 1:56 pm

Rather “the miracle of eating the seed corn”.

theblob January 30, 2009 at 1:58 pm

Rather “the miracle of eating the seed corn”.

Bruce Koerber January 30, 2009 at 2:58 pm

January 30, 2009
Stimulus Package Aggravates Everything!

Apparently these politicians actually believe the ego-driven interventionists that they have surrounded themselves with. Although the rhetoric of politicians most of the time is insincere it appears that blatantly enriching themselves when everyone is suffering from the recession is not an immediate goal.

That leaves only one possibility: that these politicians are truly economic imbeciles who believe what the snakes hiss into their ears and what they have been indoctrinated with from an early age by the government funded education system.

That is not an excuse. Alternatives are available to them.

Are they too cowardly to turn against the unConstitutional coup? Do they have an ego-driven ambition that takes precedence over all ethics? Apparently the answer to these two questions is yes!

David Dzidzikashvili January 30, 2009 at 7:25 pm

Obama administration needs to realize that in several months economic crisis and soaring deficit will be solely his administration’s and his party’s problem, so for any previous or future mistakes he’ll have to take the blame. Two-three months from now nobody will remember Bush’s policies and the Democrats have to be more careful on the long-term effects of massive spending. If the new stimulus fails, just like the past one, then this will balloon into Obama’s first political problem. We have to also realize, that on the long-term we won’t be able to afford more bailouts and there has to be alternative solutions, since we are passing the trillion Dollar deficit boundary. Printing more money can be utilized as short-term tool, but on the long run it will devastate economy. Something needs to be done immediately, but more regulation & spending does not seem to be a logical answer, we need another alternative solution. Maybe we should take pure libertarian approach and let the free market decide who wins or loses? This will cause social unrest and chaos, so as a society we can not afford this option either. Maybe we’ve killed the goose that laid eggs for us?

Ralph Fucetola JD January 31, 2009 at 9:14 pm

Per the comment by “the blob” – I recall hearing Mises use that exact phrase, “eating your seed corn” at a Society for Individual Liberty conference in Philadelphia many years ago… early 1970s.

The phrase has come back to me time and time again in recent months.

I remember Mises standing behind a lectern, shaking a finger at us all, “You are eating your seed corn!”

Absolutely correct.

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