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Team Obama justifies their “drunken sailor” spending spree by constantly arguing that they are creating jobs, creating opportunity, building infrastructure, and stimulating the economy. It’s not really an argument they’re putting forth, they put it forth as fact. Once again, they are wrong.

There is an economic term called the “multiplier effect.” The multiplier effect is the number or multiplier that is applied to spending to characterize the spending’s effect on aggregate demand for goods and thus, gross domestic product. Team Obama is using the multiplier effect number of 1.5. This means that they are claiming that every dollar they spend causes gross domestic product to increase by 1.5 times. They are claiming that the added public goods are essentially free to society. By this logic, they should just keep spending and thus, again by Team Obama’s logic, they will grow the gross domestic problem by an amount 1.5 times greater than their spending. This is false and here’s why:

1. Team Obama’s theory (a simple Keynesian macroeconomic model) assumes that the government is better than the private market at utilizing idle resources to produce goods. They are assuming that government is more efficient than private enterprise at spending money and utilizing resources. Given the financial state of our federal government, California, New York City’s bankruptcy, and thousands of other factually bankrupt governments across our nation, one would have to be a fool to believe that the government is more efficient than private enterprise. Further, there is no way to reconcile Team Obama’s theory with the reality that the nations with ungodly high taxes and even more ungodly spending, i.e. U.S.S.R., Poland, Latvia, failed. Collapsed. Governments are not efficient. There is no profit incentive, little accountability, and an utter lack of responsibility. Thus, the first premise of Team Obama, that government is efficient, is false.

2. Economic data does not support the contention that our government’s spending has a multiplier effect of 1.5. The best data is war time because war time expenditures are thought to be temporary, employment through hiring soldiers rises, and psychologically, folks believe the war will end, the government spending will cease, and therefore, they don’t contract their personal budgets. The data shows that during World War I, World War II, the Korean War and the Vietnam War, the multiplier effect was .8. This means that there was no multiplier effect, instead there was a reducing effect on gross domestic product. Every dollar spent shrunk the economy by 20% of the government spending. Spend a dollar, gross domestic product shrinks by 20%. Again, Team Obama is preaching based upon a falsehood.

3. Economists (not on the government payroll) estimate that the peace time multiplier effect is not far from zero. This means that it costs a dollar to spend a dollar. Every dollar spent by government pretty much shrinks the gross domestic product by a dollar.

Yet, Team Obama ignores these hard and tested economic facts, instead parroting the falsehood that their “drunken sailor” spending spree is helping. This premise defies economic history. It is false. Team Obama is effectively shrinking our gross domestic product which means that they are hurting our economy through their “drunken sailor” spending spree.

Want more proof? How are you personally planning for the future? Are you cutting back, being frugal, worried, limiting your investments, taking less risks, hunkering down? I’ll bet you are. But why if Team Obama’s plan is so great?. Because in your gut, you know it isn’t so great. Because in your gut, you’re concerned about your economic future. Because in your gut, you’re really concerned about your children’s future. Come on folks, think of it in family finance terms. If your family were near bankruptcy, would you take on more debt and spend like a “drunken sailor?” Of course not. So why would you think more debt and ridiculous spending would work for the United States. It won’t. Never has, never will.

Once again, Team Obama is lying to get what they want: More citizens in need, more reason for government, more power, more control and less freedom.

Pundits are right, compared to Team Obama, Osama Bin Laden is an amateur at destroying America. At least Osama is honest about his intentions.

That’s my Reetzality for the day.

Brett Reetz

Note: The multiplier effect numbers and war time examples were taken from a January 22, 2009 article by Robert J. Barro who is an economics professor at Harvard University and a senior fellow at Standford University’s Hoover Institution.