"Betting Against Our Children's Future: A $1 Trillion Gamble" By U.S. Senators John McCain And Jon Kyl

Op-Ed

February 15, 2009

Proponents of the so-called economic "stimulus" bill have argued that legislation is necessary to stimulate our economy. We agree. The nation needs legislation that creates jobs, fixes our housing crisis, and puts us on a path toward economic recovery. Unfortunately, the legislation Congress passed on Friday does not achieve these goals. Instead, this massive, out-of-control spending bill will only serve to increase our burgeoning national debt and do little to help Americans who are facing foreclosures, layoffs, and financial challenges.

Arizona has experienced the largest number of home foreclosures in the United States behind Nevada and Florida. Phoenix leads every metropolitan area in the country for the greatest decline in home values in 2008. Over a third of all homes sold in Tucson last year were sold at a loss. The housing crisis in Arizona is exacerbated by the significant job losses the state has experienced.

The fact is, we are in uncharted territory, and no one knows for sure how best to handle the economic crisis. With that in mind, Republicans and Democrats could have worked collectively in an effort to remedy the problems we face. But in only two weeks, the partisan legislation drafted by House Speaker Pelosi was pushed through Congress, and virtually all of the suggested improvements from Republicans were soundly rejected.

There are huge long-term consequences to spending over $1 trillion - all of which will have to be borrowed - in such a short time. The increased debt burden could substantially affect our quality of life long after our economy recovers. According to the Center for Budget Analysis, the stimulus package is adding about $30,000 in new federal debt per American household. We are mortgaging our children's future. This is generational theft.

While our economy will eventually recover, it will more likely be in spite of the "stimulus" bill, not because of it. Moreover, the recovery could well take longer because the massive amount of government spending in this bill will crowd out private investment, which is critical to job creation. Economists generally predict that for every $1 the government spends, it takes $1 away from real people and business, leaving $1 less for private investment or consumption.

The economic theory that underpins this "stimulus" bill is that a massive amount of government spending will eventually find its way into people's pockets and they will spend it, thereby creating (or saving) jobs, according to supporters of the bill. But in an open letter to the President published in newspapers around the country, 250 leading economists, including Dr. Edward Prescott, Nobel laureate from Arizona State University, disputed this premise. They argued instead for removing "impediments to work, saving, investment and production" and said that "lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth."

For these reasons, during the debate in the Senate, Republicans presented a plan not only to lower taxes for all working Americans, but also fix our housing crisis; allow small business - which account for 80 percent of all jobs in the United States - to keep more of their profits to hire new employees; and then stop the spending once our economy improves. And the total cost of our alternative proposal was about half the cost of the bill Congress approved.

Even before accounting for the cost of the Democrats' "stimulus" bill, the federal budget deficit for the current fiscal year is estimated to be a jaw-dropping $1.2 trillion. The stimulus bill adds over $1 trillion more, representing an unprecedented gamble with the taxpayers' money.

The least we can do is ask the hard questions about what we're getting for our money and take the time to better understand the long-term ramifications for our children and grandchildren. The stakes are too high, and the cost too great to gamble $1 trillion we don't have. Unfortunately, taking a gamble won out.

Source