A few thoughts about “stimulus”

by Rossputin | 5:32 am, June 21, 2010 | Comments Off

The other day on CNBC, I saw Larry Kudlow discussing the Democrats’ desire for a second “jobs bill” – what they’re calling “stimulus” now that “stimulus” is known to be ineffective union-boosting pork.

I sent Mr. Kudlow a few thoughts on the subject (and he was kind enough to respond that I was “dead right.”)

Here are those thoughts:

One thing I think is worth mentioning is how all of the jobs which are suggested to be saved by a proposed second “stimulus”/jobs measure, like teachers, cops, firemen, etc., are government employees…not just that, but state government employees.

Thus, this so-called stimulus is really just plugging holes in state budgets. Beyond its questionable legality, this has a bunch of other problems:

1) Since some states have worse budget problems than others, the effect of the legislation will be to transfer money from taxpayers in some states to taxpayers in other states, like from Indiana to California, from Maine to New York, etc.

2) The moral hazard problem is huge, removing pressure from states and municipalities to tighten their belts, feeling like they’re being seen as something like “too big to fail”.

3) Creating/saving government jobs adds to the long-term burden of the cost of government on the private sector in addition to increasing the power of public sector unions, one of the most destructive forces in the nation.

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