Gary North

February 13, 2009

Jim Wallis has come out in favor of the proposed $787 billion economic deficit package, called a stimulus.

In his gushing praise, he does not ask the following questions:

Where will the government get the money?

Since it offers tax cuts, how will taxes pay for all of it?

If private investors will be asked to lend the government the money, what will this do to interest rates?

If private lenders lend, what will this do to the availability of capital in the private sector?

If the money does not fund private capital formation, what will provide economic growth? Government pork?

How will this deficit be repaid? By whom?

If it is not repaid, how should we interpret the following? "The wicked borrow, and do not repay" (Psalms 37:21a).

If private lenders refuse to lend, who else will (hint: central banks)?

If central banks buy this additional debt, where will they get the money? (Hint: digital printing presses.)

The stimulus is mostly Keynesian economics in action. It is tooth fairy economics: something for nothing. It is opposed to thrift.

The bill is about 1,400 pages long. Has Mr. Wallis actually read it? Of course not. I know this because his editorial is dated February 12, and the full bill was not delivered to the House of Representatives until 11 p.m. that night. He simply believes what the Administration says: this will be good for the economy. He has faith in the Democratic Party, as defined by the New Testament: "Now faith is the substance of things hoped for, the evidence of things not seen" (Hebrews 11:1).

On how House Democrats rammed this bill through, ignoring normal procedure. click here.

Here is the breakdown of spending (huge) and tax credit/cuts (small). The main tax cut was a $400 cut for payroll taxes -- enjoyed by everyone. Tax cuts account for one-third of the stimulus bill. Mr. Wallis resents the tax cuts, as you will read.

Mr. Wallis is an advocate of the Social Gospel. The supreme dogma of the Social Gospel is this: "Thou shalt not steal, except by majority vote." Some extreme liberals within the movement also add: "or a 5 to 4 Supreme Court decision."

Wallis writes:

The economy and the nation are at a crossroads. Unemployment, poverty, and hardship are on the rise. For many years, official Washington has said, "It is not the time to deal with poverty," whether in good or bad economic times. The stars have now aligned in the midst of this economic crisis, and it is precisely the time to address the urgent issues of poverty in America.

The stars have not aligned. Congressional voting blocs have aligned. Who gets the pork, and how much? Who gets his constituents paid off for voting correctly?

First, economists across the political spectrum agree that the economy desperately needs to be stimulated by federal investment in things that will generate immediate economic activity and jobs. Second, the same analysts also agree that benefits to low-income families will result in immediate economic stimulation as people in distress will spend the money they receive because they have no other choice. In other words, directly helping vulnerable people works because it will quickly help stimulate the economy, and it's right because it will immediately help poor and vulnerable people. How often do we get to do what works and what's right at the same time?

Economists across the board are lined up behind John Maynard Keynes, whose advocacy of deficit spending in 1936 was used by politicians to create the unfunded and unsustainable debt structures of every Western industrial nation. Here is what the United States is facing.

At the heart of our religious traditions is the command to help the vulnerable and to have a bias for the poorest among us. The compromise the economic stimulus package agreed to in Congress yesterday takes some important steps in directly assisting poor and low-income people and stimulating the economy at the same time. Helping those who have fallen on hard times -- and helping states avert cuts in a range of critical services -- will do more to help the economy and create jobs than poorly targeted tax cuts.

Jesus did not recommend using the monopolistic power of civil government to steal from one voting bloc to give to another on threat of fines or jail. That was what Pilate's civil government advocated. The program was called bread and circuses.

The package includes some significant funding increases for food stamps, increasing and extending unemployment benefits, health insurance for unemployed workers, Medicaid, Head Start, the Child Care Development Block Grant, and fiscal relief for states to assist them in meeting their budget deficits without cutting needed social services. It expands the Earned Income Tax Credit, including marriage penalty relief, and considerably expands the Child Tax Credit. While not all of these were funded at the levels we might have hoped for, taken together they do represent significant assistance to those in need.

To enslave any group, the low-cost way is to make its members economically dependent on the State. Politicians then get their votes indefinitely.

The economic forecasts are bleak and if unemployment reaches 9 percent, as many predict, the increases in poverty could be stunning. These provisions in the stimulus package all push against the rising tide of poverty and hardship. Economists have also concluded that they are among the most effective mechanisms for shoring up the flagging economy.

The overwhelming number of academic economists are paid by tax-funded universities. Most of the others got their training and degrees in tax-funded universities. They live by State-mandated wealth redistribution. It is not surprising that they advocate more of the same. They are paid by the State to promote the State. The major beneficiaries of Keynesian economics are not poor people; they are commercial bankers. I have explained this elsewhere.

The final stimulus package takes an important step toward doing the best thing for the economy and the right thing for the poor.

This brings us back to my earlier question: What Would Jesus Steal?