The G-8 leaders have framed the discussion of reviving the world economy in terms of making the choice between austerity and growth. Most of the leaders are banking on their electorate choosing to support growth, but, what is cleverly hidden is the fact that what the leaders are really proposing is growth of government, not economic growth. This type of growth will result in an acceleration of debt, more government control, and less private sector expansion. Europe may be trapped in the position where these are their only options, but, this is no solution for America.
The Obama Administration and Democrats are following Europe’s lead, and are constructing a new straw man to try to influence the upcoming debt ceiling negotiations. You saw this being trialled on Fox News Sunday with Democrat Strategist Joe Trippi, who warned against the austerity approach by describing the death spiral of less spending resulting in lower government revenue, causing even less spending, causing even lower government revenue, resulting in economic collapse. With the media’s support, the Obama Administration position will surely dominate the discussion. Already, you’re seeing headlines like this: “Obama sees emerging consensus on global economic growth”. But, this false choice could not be more contrary to American ideals.
Recessions cannot be avoided by any economic system, but in the free market, recessions have the side effect of cleaning out inefficiencies in the economy. The free market approach has caused America to be able to rebound sharply from recessions, but this was not the approach taken by the Obama Administration in the current recession. The approach to the current recession was to bail out failing companies, which has left them with structural inefficiencies. Also, government spending dramatically increased, giving the federal government much more control of the economy. The new burdens placed on companies and consumers are causing both groups to take a defensive posture. The current approach, as judged by the tepid GDP expansion, has failed, but the Obama Administration is gearing up to push for more of the same.
America needs to lead the world out of this global recession by unleashing the power of the individual. This will only be accomplished by reducing government control and by encouraging people to take more risks in starting and expanding businesses. The Obama Administration has made it clear that they won’t take this approach, and the Romney campaign has indicated that they will. America now has a choice between the Austerity vs. Growth Scam, and America getting back to being America. The choice couldn’t be any more clear.