Think we're in an economic crisis?
Politicians are eager to remind us that we are.
It's frightening just to turn on the television. You can't change the channel without hearing a politician use the word "crisis" or "catastrophe."
"A failure to act, and act now, will turn a crisis into a catastrophe," President Obama said on Feb. 4th.
"We have an economic crisis, the worst since the Great Depression," Vice President Joe Biden said of the situation at the House Democratic Issues Conference on February 6th.
Indeed, the situation is bad. The stock market has continued to fall and unemployment has reached 8.1 percent. But what should a country do about that? The political class says we need "stimulus."
And so stimulus we got, along with bailouts and rescues adding up to billions and trillions of your dollars. Everything that has been spent and promised to be spent will wind up costing each taxpayer around $16,000.
The politicians say they must take this money from you not just to bail out homeowners and financial institutions like AIG, Fannie Mae and Freddie Mac, but also to spend it on roads, schools, the arts, trains, hiking trails and more. It will jump-start our economy, they say.
"We have a consensus that we need a big stimulus package that will jolt the economy back into shape," Obama said last November while introducing his economic team, calling for immediate governmental action.
House Majority Leader Steny Hoyer agreed: "Every economist from right to left, Republican, Democrat, advises that it has to be a very substantial package," he told ABC News.
That's all we seem to hear from politicians and pundits: "Every economist" agrees that this massive stimulus is the only answer.
But that's not true. More than 350 professional economists, including three Nobel Prize winners, signed a Cato Institute petition opposing the stimulus, arguing that government spending will only worsen the situation.
"Government should, instead of increasing spending, it should cut spending," said David Tuerck of Suffolk University. He and the other economists in the petition argue that the government simply cannot spend its way out of a crisis.
"How is it the government is going to be able to spend a dollar in such a way that it generates a dollar or more in value?" asked George Mason University economist Peter Leeson. "A more likely possibility is that a dollar that government takes out of the private sector is a dollar the private sector doesn't have to spend anymore."
It's quite a conceit to assume that a few people in Washington are smart enough to know precisely how to spend trillions of your tax dollars. It raises the question: Because careless spending got us into this mess, should we be trying to spend our way out of it?
"Absolutely," Maxine Waters of the House Finance Committee told ABC News. "We are in an economic crisis. Government can't just sit and twiddle its fingers."
Hoyer agreed, insisting that spending is necessary because "we are in the deepest recession we have seen since the Great Depression."
Politicians and pundits alike keep saying that, but unemployment reached 25 percent during the Great Depression. It's only 8 percent today. It reached nearly 11 percent in 1982, yet few people even remember that.