Why the stimulus has failed?

Article from Newt.Org

Last week we found out that, even while the White House is ramping up its public relations efforts to highlight construction projects funded with stimulus jobs, overall jobless claims are climbing.

This development is unfortunate for all those seeking employment, but hardly unexpected.

With the Institute for Policy Innovation’s Peter Ferrara, Newt writes about “The Circus of Obamanomics” in Chapter 12 of To Save America:

The Left like these stimulus bills because they get to use big government to allocate massive sums of money to their favorite projects and interest groups. But this approach never improves the economy, because the underlying Keynesian economics are wrong…

Trickle-down bureaucracy does not create wealth. Obama’s stimulus simply borrowed close to $1 trillion from the private economy to pour a trillion back in through increased government spending, producing no net economic gain.

They also present data that shows Obamanomics actually threatens America’s economic recovery:

The recession officially began in December 2007, according to the National Bureau of Economic Research. The average recession since World War II has lasted ten months, with the longest spanning sixteen months. But the Bush-Obama recession lasted almost two years thanks to the outdated Keynesian policies adopted by both presidents…Moreover, the weak rebound violates a historic rule: the deeper the recession the stronger the recovery. Based on the severity of the past recession, real growth over 2010 should be 6-8 percent…

Obama’s high tax, high spending approach along with the Fed’s easy money, cheap dollar policies…are policies for long-term economic stagnation, and perhaps another, even deeper recession. If they are not completely replaced with pro-growth alternatives, we will suffer less opportunity, less upward mobility, and a long-term decline in America’s standard of living...

Newt and Peter then outline a set of proposals that would reinvigorate the American economy and cut unemployment from 10 down to 3-4 percent. In addition to substantial spending cuts and a robust energy plan, their proposals include:

1. Slash the corporate tax rate to 12.5%, matching Ireland;
2. Abolish capital gains taxes to match China;
3. Cut federal payroll taxes for two years followed by a permanent personal account option for younger workers;
4. Abolish the death tax;
5. Allow for 100 percent expensing of new equipment purchases by businesses, stimulating investment in new, productive technologies;
6. Repeal the disastrous mark-to-market accounting that exacerbated the financial crisis;
7. Break up Fannie Mae and Freddie Mac and move their successors back to the free market;
8. Adopt a strong monetary policy, ensuring lower interest rates and more long-term capital investment.