From today's WSJ editorial page:
"President Obama enters the debt-ceiling talks today when he meets with members of both parties, and in his Saturday weekly radio address he unveiled a new line of argument against significant spending cuts: "We can't simply cut our way to prosperity."
That's a nifty rhetorical riff, a play off the old Ronald Reagan line that we can't tax our way to prosperity. The argument is that if we cut too much spending on too many good things—like education, "clean energy" and "advanced manufacturing," to name three examples highlighted by the President—the economy will suffer.
Too bad it won't fly. It's a truism that budget cuts alone will not guarantee faster economic growth, but at the current moment they will get us closer to it. With spending at 24% and debt held by the public at 70% of GDP—both modern records—the U.S. needs drastic spending cuts to head off a downward future spiral of tax increases and unaffordable interest payments. As Milton Friedman taught, spending is the real measure of government's burden on the private economy, and reducing it leaves more resources for private actors to spend and invest.
It is also true that some government spending can be economically useful—to the extent that it enhances productivity more than it would have in the private economy. But the irony is that it is precisely the spending priorities that Mr. Obama mentions that will be crowded out because of his refusal to cooperate in reforming entitlements like Medicare and Social Security. By trying to protect all federal spending except defense, liberals are guaranteeing that many of their most cherished plans will be squeezed. They're the ones who are spending us into austerity."
Spending His Way to Austerity (Obama)
