Joe Pitts, October 18, 2002

In 1986, Ronald Reagan offered this pearl of wisdom: "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." That was sixteen years ago, eight years before the end of a virtually uninterrupted 62-year succession of Democratically-controlled congresses.

Since then, Republicans have worked very hard, paddling upstream, to change the government’s way of thinking about key economic issues. Wrestling first with the Clinton White House and then with the Daschle Senate, we have changed things a little at a time. In 1996, America’s welfare system was reformed, empowering the most economically vulnerable Americans and moving an amazing 60 percent of them into the workforce. Then, for four consecutive years, the government ran a budget surplus and began paying off the public debt for the first time in three decades.

Today, facing both war and recession, sound government economics are more important than ever. The right decisions will mean secure jobs now and comfortable retirements later. The wrong decisions will mean lost jobs and 401(k)s and a Social Security system that cannot be relied upon to house and feed us in our golden years. Nothing could be more important than making the right decisions now.

With congressional elections just around the corner, Democrats have launched a partisan offensive, doing their best to convince America that Republicans are doing all the wrong things to kick-start the economy. What they don’t say is that they don’t have any alternative that more than a handful of them can agree on.

For a peek at what economic decision-making might look like with Democrats at the helm, consider the Senate’s failure to pass a budget this year and House Democratic Leader Dick Gephardt’s recent economic proposals.

For the first time in the history of modern budgeting, the Democratically controlled Senate failed this year to pass a budget. Like families do, Congress decides at the beginning of each year how much it can afford to spend. Then, in the fall, it begins to actually appropriate money from that budget to various government programs.

This year, the Senate completely failed to pass a budget. This was astoundingly irresponsible. Not only is it a violation of (admittedly unenforceable) federal law, but it also opened the door to limitless government spending. That’s why you now hear Democrats on the campaign trail crowing about how much they want to spend on various government programs. Without a budget for them to adhere to, the sky is quite literally the limit.

Consider as well the stimulus package proposed on October 15 by House Democratic Leader Dick Gephardt. He proposed $125 billion new government spending to "prime the pump" of the economy. But Gephardt’s plan would actually harm the economy.

Implementing his plan would require the government to borrow $125 billion from the public. To do that, the government would sell Treasury bonds and notes, which would be bought by Americans as investments. That money would otherwise have been used to invest in companies, start businesses, or keep in a bank (where it would be used to make loans to individuals and businesses). In other words, no new money would enter the economy under Gephardt’s plan.

Some of the money taken from private hands would fund new government construction programs, which might result in some new, but temporary, jobs. If those dollars had been invested privately, however, businesses would have been able to expand and invest, creating permanent jobs and actually expanding the economy.

By taking $125 billion out of the economy and using it on one-time expenditures, the Gephardt plan would actually result in fewer permanent jobs. That’s just dumb. But that’s the best the Democrats have come up with.

Well over a year ago, President Bush and Republicans in Congress acted to stimulate the economy by returning money to the American people. When people have more money, they spend more. When they spend more, companies make more products. When companies make more products, they hire more people. When they hire more people, more people have money to spend. That is the only way to stimulate the economy. Amazingly, after all we’ve learned since the Carter Administration, the Democrats want to do just the opposite: take money out of the economy.

The economy still needs improvement, and Congress and the President have more work to do to make that happen. We should take care, however, to make sure we don’t accept proposals that would do more harm than good.

Congressman Joe Pitts is a Republican member of the U.S. House of Representatives from Pennsylvania.