The case for Growth -- Investment

Any person who has taken a course in macroeconomics knows (or at least should know) that in order to grow the private sector, there has to be investment. New plant and equipment brings the creation of new jobs as workers are needed to run the new installation and to manufacture its compenent parts. Indeed, capital investment is by far the best way to increase GDP. The model used by Obama and the Obamacrats to promote growth is not completely ineffective, but it has little impact compared to the same expenditure for investment. think of it this way: if the federal government uses stimulus funds to send transfer payments to the states (the biggest component of the stimulus package), these funds will pay for additional state employees until the funds are gone. If the same amount were spent through tax expenditures to encourage private investment, the result would be construction of plants, installation of equipment, opening of offices, creation of new products and the like which would continue on for years, long after the expenditure had ended. The jobs resulting from the investments would be there in the long term, unlike hte state jobs which end when the federal money runs out. Even the revenue obtained by the government from those who gain jobs as a result of the investment continues on for years, unlike the taxes on the state employees who got a few extra months of work from the stimulus funds. Further, all those new private employees who have jobs due to the investment come off the unemployment and welfare-related rolls of the government, so expenditures are lessened. The payments to states do none of that. In short, it is no contest; encouraging investment is a far better path to prosperity than increased federal spending.

Any GOP plan for the economy in 2012 has to promote investment. It will not be enough just to cut spending; there has to be compnents to the plan that will lift the level of investment in the private sector. Paul Ryan, chairman of the House Budget Committee understands this fact; the budget proposal that he is releasing today reportedly has major portions devoted to just this subject.

The American people can easily be made to understand that investment in the private sector is more benficial than increased government spending. Only the die hard progressives will lament the loss of government power that comes with lowering spending. The vast majority will see robust economic growth as a much more desirable goal for the country. President Obama is irretrievably connected to higher spending by the government as the way to fuel growth in the economy. He will not be able to pivot to suddenly become a proponent of private sector growth. A GOP candidate who consistently talks about promoting investment as the way to improve the lot of all Americans should have great success on this issue.