With the passage of the massive 1.7 billion dollar Omnibus Bill in a lame-duck session of Congress, our politicians have demonstrated their continued desire to spend taxpayers to the poorhouse. Although it is ostensibly designed to keep our government running, the bill is stuffed with pork-barrel legislation including 100 billion dollars for Ukraine and millions for LGBT museums among other things.
Much like the absurdly titled Inflation Reduction Act, Omnibus is born out of a desire to promote a political agenda rather than fulfill necessary spending requirements. Bureaucratic bloat, ideological maneuvering, and a broken welfare system are continuing to burden American society. Many politicians mistakenly believe that massive government spending is better than a free-market system.
The attempt to infuse more cash into the American economy demonstrates the Democrat’s (and some Republican’s) commitment to Keynesian economics. Named for the economist John Maynard Keynes, this economic regime is characterized by high spending designed to stimulate the economy. Since the 1940s his ideas have become an integral part of left-wing policymaking, despite Keynsianism’s dismal results.
The Keynesian revolution occurred with the presidency of FDR when a free-market approach was abandoned in favor of massive government spending. Although Roosevelt is credited with saving America from the Great Depression the opposite was true. According to the economist Thomas Sowell, in the 12 months following the stock market crash of 1929 the unemployment rate peaked at 9.6% and began to decrease. However, after the first government intervention, unemployment spiked and continued to increase despite a massive expansion of federal spending. Most economists now believe that it was FDR’s policies that extended the Great Depression, making it into the crisis that we remember today.
Critics of this view often argue that free-market approaches were also inadequate, while pointing to the supposedly laissez-faire policies of President Herbert Hoover. Like Roosevelt’s supposed economic successes, this too is a myth. Hoover was already in the process of enacting massive reforms before Rossevelt came to power. In fact, one of FDR’s senior advisors said that despite the criticism they leveled at Hoover, his ideas informed their policy enactments.
A Keynesian approach was also adopted after the revolutionary Johnson presidency when the welfare state saw a massive expansion. Government spending continued apace until the Carter presidency when stagflation inevitably took hold.
It took 8 years of Ronald Reagan’s policies to correct the economy and create sustained growth. Predictably, the first two years of Reagan’s term were economically painful as Chairman of the Federal Reserve Paul Volcker tightened interest rates in an attempt to squeeze inflation out of the economy. After correcting these issues, the next 6 years were characterized by rapid and sustainable growth.
Although Keynesian economics is highly popular among left-wing intellectuals for its emphasis on government authority, its empirical record is far from exemplary. Governments that have enacted Keynes’s policies have either suffered from recessions or chronic slow-growth. The passage of the Omnibus Bill and the Biden Administration’s continued interventions in the economy demonstrates the Democrats desire to avoid economic reality in the name of ideological maneuvering. The result will be less production, less consumption, and a lower standard of living.
