As Mike Allen of Politico reports, Vice President Joe Biden has kicked off what the Obama Administration calls its “Recovery Summer.” According to senior adviser David Axelrod, “This summer will be the most active Recovery Act season yet.” It sounds like Axelrod has never heard the popular saying about what to do when you’re in a hole: stop digging.
As prominent Keynesian economist and director of the Earth Institute at Columbia University Jeffrey Sachs admitted last week, the Stimulus Act has already failed. And in failing, it’s created an even larger burden of debt. Indeed, that’s one reason why it failed. Businesses know that all the borrowing the government is doing will have to be repaid. The faster the government spends, the more nervous about the future businesses get, and the less eager they are to take risks that will create new jobs.
A former minister in Britain, Lord Myners, recently spoke to just this point. Lord Myners had a distinguished career in the City of London (the equivalent of the U.S.’s Wall Street) before he joined Gordon Brown’s Labour Government in late 2008, to help deal with the financial crisis. But as Lord Myners put it:
I found it very frustrating to sit in meetings with some of my fellow ministers talking about creating jobs in the green economy, creating jobs in biotechnology. The Government can’t create jobs. The Government can create the environment which is conducive to the creation of jobs but it cannot create jobs and we mislead ourselves if we believe it can. . . . There is nothing progressive about a government that consistently spends more than it can raise in taxation and certainly nothing progressive that endows generations to come with the liabilities incurred with respect to the current generation.
Lord Myners should know: the government of which he was part drove government spending up to almost 50 percent of the entire British economy. It’s a pity he didn’t speak up when he was in office, because he helped, in a small way, to put Britain in its current unsustainable situation. With another active Recover Act season getting under way in the U.S., that’s the same road we’re going down here.