Well, it’s not exactly Animal House, but watch what Newt Gingrich does here. He draws a fairly clear delineation between Democrats and Republicans by calling the former the party of foodstamps and the latter the party of paychecks. Not only does Newt deride “liberal math” — which we’ll address in a moment — but Newt also underscores how the Democrats have dumped massive uncertainties into the business environment and killed job growth for much longer than necessary in a post-recession period. It’s as stark a contrast and as memorable a comparison as we’ve seen yet in this midterm cycle:
Pelosi, for her part, continues to insist that food stamps and unemployment stimulate the economy, and claims that every dollar spent in food stamps returns $1.79 to the economy. She floated this notion earlier this summer while trying to defend more borrowing to pay for yet another extension on jobless benefits rather than funding it through monies already authorized in Porkulus. That argument assumes that the $1 food stamp in question got plucked off the food-stamp tree at no cost to the government, rather than costing the full dollar plus the administrative costs of distribution and accountability. Even then, that dollar won’t generate a 79% ROI as it travels through the retail sector; if that were true, investors would put their money into nothing else.
That dollar comes at the expense of private-sector opportunities as well. I noted that in my rebuttal to Pelosi in July:
- “This is one of the biggest stimuluses to our economy” — No, it’s a net drain on the economy, although for understandable purposes. It reroutes capital from production to non-production. We are paying people who aren’t working by using capital that could otherwise go to creating jobs. It’s a policy tradeoff and understandable, although not for 99 weeks, which is what Pelosi is attempting to extend further.
- “It injects demand into the economy” — Not at the rate in which the capital gets destroyed. Remember, the money for this program gets confiscated from producers and passed through the government bureaucracy to non-producers. What winds up back in the hands of producers is much less than what left their hands in the first place.
- “It creates jobs faster than almost any other initiative” — No, it doesn’t. In fact, it depresses job creation, which is part of the policy tradeoff. If this was right, we’d be at zero unemployment by now. Tax cuts, especially on capital gains, creates jobs by getting capital into the hands of job creators.
- “It’s impossible to think of a situation where we would have a country without unemployment benefits” — That’s not actually the debate. No one is suggesting that we eliminate all unemployment benefits. The debate is whether we will keep extending them further.
Gingrich has this correct. Pelosi and her caucus want an electorate dependent on government handouts. Republicans want an environment where people get paychecks rather than perpetual welfare and economic vitality rather than stagnation and lost opportunities.