GDP on loan from China

Although the economy shrank overall in 2009, plenty of media outlets and Democrats are overjoyed to point out that the economy grew at a rate in the last quarter that was higher than we’ve seen since all the way back in, well, the Bush years.  The 5.7% GDP growth in the fourth quarter of 2009 was more than a lot of economists expected.  Economists who know what happens when you throw trillions of debt spending at the economy weren’t too surprised.

Once again, debt does not equal wealth.  Obama increased spending by 33% his first year while revenues fell.  This year he is doing the same, even without unplanned stimulus spending.  Every jobs bill Obama thinks up is nothing more than borrowing hundreds of billions more and throwing it at short-term government infrastructure projects.  I still haven’t found out how many times you have to repave the same stretch of road before the government counts as a job saved or created.

If you lend a homeless man a million dollars at a high interest rate, he buys a house, and then the house drops in value to $800k, is his wealth growing?  He does have an $800,000 house that he didn’t have before.  I hate to say it, but our growth in the fourth quarter of 2009 is no different.

In the fourth quarter of 2009 the market value of our domestic product increased by $221 billion.  That’s not bad.  It’s not quite as good as the 7.2% GDP growth Bush’s tax cuts produced, but it’s definitely better than the economic retraction we saw in the first half of 2009.  At the same time though, debt spending increased by $260 billion in the fourth quarter.

So we borrowed $260 billion and the value of our domestic product increased by $221 billion.  Meanwhile more than 600,000 jobs were lost in the fourth quarter.  And lots of roads got repaved again.  Oh yeah, and plenty of Democrat congressional districts got new duck ponds, skate parks, and honey bee insurance.

Now we have to pay for our borrowed growth.  Someone finally read my blog and figured out that Obama is going to raise taxes by not renewing the Bush tax cuts.  Obama has already written Cap and Trade (which would increase energy costs by thousands for each American family) into his budget.  The sad thing is that with all these tax increases we still are expecting a $1.6 trillion deficit for 2011.  This is only twice what Obama was projecting for 2011 when he took office.  For the record, Bush’s worst deficit was just over $400 billion after a year of Democrat control of the Congress.  Bush even inherited the tech bubble, loose fiscal policy, and a decimated terror intelligence community (who couldn’t stop 9/11) from the previous administration.  By the way, if you think Bush inherited a surplus you haven’t been reading my blog.

Obama kept telling us that only government can fix the economy.  Many believed him.  Hopefully we have learned our lesson.  The government doesn’t make money.  The government doesn’t produce goods and services that people want at prices they are willing to pay.  The government cannot produce growth.  All the government can do is beg, borrow, and steal from some and benevolently hand out to others while calling it growth.  If Obama has caused anything to change, hopefully it’s that we finally know better.


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