Arizona Republic
Jim Ward
Powerful forces, in a rush to judgment, have come together in a perfect storm: fear that a depression can be prevented only by massive government intervention, combined with a far-left White House and congressional leadership with few checks and balances from minority conservatives. The stimulus package passed by Congress will damage America for generations and has been unleashed under the aegis of short-term crisis management.
The fact is that the U.S. recession will be long, hard and worse than the average downturn. A study presented this past month by Carmen M. Reinhart from the University of Maryland and Kenneth S. Rogoff from Harvard University confirmed that recessions triggered by financial crisis are much more severe than other recessions and last up to an average of five years with little relief from government bailouts.
Yet political expediency currently outweighs common sense and is set to start a devastating cycle. Government spending will increase dramatically, initially as a Keynesian response to the economic crisis and subsequently due to the policies of a left-leaning government.
Tax receipts will be down materially for several years. The cost of new liberal programs will dwarf the cost of the recession. National debt will spin out of control and materially exceed gross domestic product.
Within 24 months, taxes on highly productive individuals and businesses will be raised dramatically to reduce the deficit, dampening entrepreneurial initiative and corporate risk investment.
This, in turn, will make American products and services increasingly uncompetitive in the global economy, resulting in accelerating job losses with private-sector job creation falling well below historic levels for a generation.
Our Democratic congressional delegation simply failed by not limiting and focusing the government stimulus package, gutting it of the irrelevant and socialistic policies that have deluded our president and the majority in Congress into reliving the New Deal.
The answer was in attacking the problem directly. The stimulus should have been directed into the hands of those who buy goods, provide services, start businesses and hire employees and give them enough time to react.
But it is still not too late. The government can take action by simplifying the overall tax code and make the effects of the simplification long lasting, including making the tax cuts of 2001 and 2003 permanent and repealing such taxes as the alternative-minimum tax and the estate tax while maintaining or even lowering the capital gains and dividends taxes, as proposed by U.S. Sen. Jim DeMint, R-South Carolina.
The second step the government could take is to redirect stimulus for small business and entrepreneurs to begin the rebuilding process, particularly here in Arizona. This would allow a new resurgence of creativity and productivity that, in the end, would do far more to increase jobs.
Our Democratic Congressional delegation must now face its own inconvenient truth that socialistic government spending might get them re-elected in the short term, but will leave all of our children and grandchildren with a country that sold its soul to a system of government that has never and will never work.
Jim Ward is a Scottsdale resident involved in venture capital. For 25 years he was a businessman who dealt with the technology and entertainment industries. He has worked with companies and clients including Apple, Microsoft, Nike and Lucasfilm.
<- Go Back
