In the letter to the editor “Republicans at heart” (Sept. 28 edition of the Daily Journal), Mr. Aadahl totally distorts economic theory with his simplistic statement “Money spent by the government ... circulates in the economy, stimulates the economy and pays back more per dollar spent.”
He should have taken Economics 101, along with Ethics 101. The following is my example: I have an extra $1,000 and want to help the economy. My three choices are to invest the money, spend the money or make a gift to the IRS. If I invest it, it will end up in a company as capital equipment, inventory or to hire new employees. If I spend it on something I really need, it will, as with government expenditures, stimulate the economy. Where Mr. Aadahl errs is that every dollar the government spends has to come now or eventually from taxes paid by the private sector. So, any stimulation from government spending reduces stimulation from the private sector. So what is better for the economy? Clearly government investments under the Obama administration have not been stellar. The Heritage Foundation lists 34 faltering or bankrupt green energy investments by Obama.
As for spending my $1,000, I would carefully research and compare the prices of any purchase. The government wouldn’t. The bottom line is that every dollar the government spends, while it may fulfill a valid social purpose, harms the economy’s long-term growth.