It is no secret to anyone (except maybe Florida State economics students) that the economy is in its worst state in years.
Economists expect the economy to have shed over 750,000 jobs over the course of February - 400,000 more than in January.
America's Insurance Giant, the lifeblood of the American insurance and financial industry, is burning through cash faster than Gator basketball is throwing away its season, losing more than $62 billion of taxpayer money in less than three months. And it's not just the United States that is experiencing an economic boom. Europe's unemployment levels are rising to historic highs, and Chinese growth has slowed almost 4 percent in the past year and a half.
Although the problem is easily identified and diverse in its causes, the government is taking a one-size-fits-all approach to shoring up our ailing economy - spend, spend, spend and don't forget more spending.
Let me premise this by saying that I am a staunch Democrat and a believer in the recent economic stimulus package, the American Recovery and Reinvestment Act, despite the fact that money provisions simply are not going to "stimulate" the economy. But there comes a point at which spending more will fail to fix our economy, and we are rapidly approaching that point.
Many easily forget that this is not Congress' first attempt to shore up the economy via a stimulus bill. Right before leaving office, former President George W. Bush pushed through Congress another stimulus package that gave American families hundreds of dollars in disposable cash, thinking that they would spend it and put it back into the economy. Not only did this bill fail to restore consumer confidence, it did nothing to help us as most Americans simply put the money into savings.
It is time that both President Barack Obama and Congress took a history lesson - you cannot spend your way to prosperity.
In the '60s,'70s and '80s, when the economy was booming, presidents from Kennedy all the way through Nixon and Carter were concerned with expanding an already-booming economy. Along with the Federal Reserve System, they supported fiscal and monetary policies that increased the money supply and lowered the interest rates, like the Fed and Congress are doing now. The result?
Politicians and economists learned very quickly that it's nearly impossible to control the natural boom and bust cycles of the economy, as runaway inflation rampaged America. It took a federal-induced recession, led by Paul Volcker to whip inflation and bring prices back into check. Unfortunately, the laws of economics don't simply change overnight.
Runaway spending and near-zero interest rates still induce hyperinflation, and spending has a limited effect on stimulating the economy. Maybe the best solution is the easiest, yet the most difficult - let the economy be. Programs like the Troubled Assets Relief Program are a good idea if the proper oversight is in place.
But increasing spending across the board is a dangerous, short-sighted policy that will only leave Americans hurting more later than they are now.
Kyle Robisch is an economics sophomore.
