"We Can't Cut Our Way To Prosperity" When Prosperity Is Based On Government Spending

“We cannot simply cut our way to prosperity,” President Obama said last night in response to the House sending him the “fiscal cliff” legislation to sign.

That statement always strikes me as curious, as though government drives the economy instead of burdens it.

I’m no anarchist. We need government. There are lots of things government should do. But the simple reality is that government is paid for by taxes on transactions and wealth created in the private sector. The government does not drive supply and demand. The government does not create wealth. The government takes some of the wealth we create in the private sector and uses it to do things our elected officials decide to do.

Thus, government is a burden to our prosperity in terms of direct cost. There are things the government can do to enhance our prosperity. The government can enforce contracts, and laws against theft and violence, etc. But the government doesn’t create prosperity.

Unless you’re Barack Obama, in which case you believe the government does create prosperity. Nor is this the only place where Obama makes that attitude clear. Look at the Presidents failed “stimulus spending” policy. The president, and his supporters, believe that they can foment prosperity in America by spending lots and lots of money.

And, in the reverse, they believe that if we cut spending we’ll have less prosperity. They take this as an article of faith, which is why the prospects for spending cuts in America’s future look pretty grim. It won’t happen as long as the people in charge have a fanatical (but economically illiterate) believe in prosperity flowing from government spending.