Stimulus of federal government a waste

Ed Dornlas, Las Vegas

Wednesday, June 30, 2010 | 2:04 a.m.

Paul Krugman, in his column in Tuesday’s Las Vegas Sun, suggests that the country is in an early stage of a depression. In Nevada, with our record unemployment, it’s hard to disagree.

He suggests the problem is that the government has not done enough to stimulate the economy. But the stimulus has mostly gone to stimulate the federal government. Now the states are running out of money and they, unlike the federal government, can’t just print more.

I suspect Krugman would like Congress to open the money taps wide and direct to the states the same stream of printed money that has stimulated the federal government.

The Federal Reserve has been active in creating money to stimulate the economy and, according to some, has been largely responsible for the favorable economic response that has occurred to date. But with the housing market in shambles and business in retreat, there is little demand for loans even at the very low interest rates offered.

The problem is that the president and Congress are oriented to growing government and not to growing the business economy, which creates private-sector jobs. President Barack Obama has elected not to take actions that would have encouraged business to create jobs and has generally done the opposite.

For example, the president could have used the stimulus money to reduce taxes on business. He could have fought to reduce the regulatory burden on business and could have tabled the carbon tax agenda until better times. Unfortunately the president is driven by his progressive ideology and his drive to nurture government and redistribute wealth, rather than encourage wealth to be created by the private sector.

Elections do have consequences.