President Obama is proposing to give the states another $50 billion. However, that would amount to another bailout for state and local government employees and their unions. The president claims that more deficit spending is necessary to sustain the nascent economic recovery. But the only thing the money would sustain is the excessive wages and benefits government employees enjoy at the expense of the private sector.
President Obama has instructed federal agencies to come up with spending cuts equal to five percent of their discretionary budgets for fiscal year 2012. The 2012 fiscal year doesn’t begin until October 2011. Why wait ?
We argued in October that “regime uncertainty” was stifling the economy’s ability to recover. Businesses are more reluctant to invest or hire when Washington pursues a policy agenda that could be detrimental to their bottom lines. The phrase was coined by economist Robert Higgs who observed that FDR’s anti-business policies prolonged the Great Depression.
A Cato essay on special-interest spending explains how many federal programs deliver subsidies to particular groups of individuals and businesses while harming taxpayers and damaging the overall economy. A major reason why spending has spun out of control in Washington is that thousands of special interest groups have secured a slice of the spending pie, and they fight tooth and nail to make sure policymakers keep baking.