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The budget is spinning out of control. We can thank President Bush for budget deficits averaging $300 billion annually. Ironically, after harshly criticizing Bush’s budget deficits, Obama proposes budgets which at best with an economic recovery will average $600 billion, and more likely, will average nearly one trillion in red ink.
If your eyes have glazed over from this budget talk, imagine this is your family budget. We all wish for more revenue each year, but we instead have to deal with the reality that our wages cannot be wished higher.
Same is true of government. Obama will find that if his plans to aggressively raise taxes “tax expenditures” passes, then the economic recovery will likely slow and the still anemic job creations will shrivel up.
Government can only grow with the rate of economic growth. Tax revenue naturally heads up with a robust recovery.
Instead of spending time thinking about how they can grind more money out of the hinterlands, the elite in Washington should focus on helping the engine of free enterprise get revved up.
Economists are clear; money in private hands benefits the recovery much more than a of government spending. They call this the multiplier of the spending. Because government spending is allocated based on political decisions more than economic justification, it is often spent on unproductive uses.
Private businesses and families that misuse money pay a consequence for their behavior and hence they make better decisions in the allocation of funds.
The only solution to the deficit crisis is spending restraint coupled with government reform, modernization of the regulatory process, and a realization that Washington spending isn’t the solution to all life’s ills.
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