RUSH: Time to go to the phones as I promised. And we're going to start in Boone, North Carolina. This is John, thank you for waiting and welcome to the program.
CALLER: Greetings, Rush. It's been 18 years since I last talked to you. And I've been listening ever since. I wanted to call today because you mentioned that it's the fifth anniversary of the stimulus package.
RUSH: That's right.
CALLER: And we still suffer high unemployment, low consumer confidence, excessive fiscal or monetary easing by the Fed. And I'm of the opinion that five years ago the stimulus should have been a lot larger than it was. I think we'd be in better shape now.
RUSH: How much bigger should it have been?
CALLER: I don't know, what, the stimulus was $750 billion.
CALLER: Okay. I'll buy that.
RUSH: But if you want to stick with 850, if you want to be more precise, that would probably be a more accurate number in terms of the actual outlay.
CALLER: Fair enough. When I think about that and then also look at how our projected debt is declining as a percentage of GDP, as a matter of fact declining at a record pace, it appears to me that the fiscal part, the Congress's part, the president's part, has just been operating counter to any stimulus that we put in five years ago.
RUSH: Did I hear you correctly that the projected debt is declining as a percentage of GDP at a record pace?
CALLER: We could debate about what the projection is, whether you want to go out five years or 10 years or even look at the past three years. But the fact of the matter is that our budget deficit, as a percentage of our GDP, is declining. And very dramatically.
RUSH: It is?
RUSH: Well, if the deficit were declining and if the percentage of debt related to GDP were declining, we would be in rapid economic growth. And we aren't.
CALLER: We aren't.
RUSH: But that's ancillary. I want to go back. You think we didn't spend enough on the stimulus. So how much more should we have spent? And where should we have spent it? Do you know what we did spend the stimulus on?
CALLER: Well, we didn't have enough shovel-ready projects ready back then. I believe Obama's mistake was turning it over just to the Democrats in the Congress --
CALLER: -- to design the stimulus. The stimulus had very few Republican votes.
CALLER: So it was a mixed bag, earmarks that weren't called earmarks.
RUSH: Well, the number, the percentage of the actual outlay that went to shovel-ready jobs, was 10%.
RUSH: The other 90% went to unions. Union workers, state, federal, but mostly state union workers. But there were no roads rebuilt or bridges or schools, and there were plenty of shovel-ready projects. The number of shovel-ready projects have increased. There's a whole bunch of shovels that we need. And the problem is where would you get the money to do this stimulus? You haven't answered me, but I'm going to assume you think it should have been twice as big. Agree or not?
CALLER: I agree it should have been larger, twice as big or three times as big.
RUSH: So we should have stimulated with $2 trillion. Where was the money going to come from?
CALLER: I think it should have been coming from borrowing since we had essentially zero interest rates on the borrowing. It would have allowed us to spend a lot more money on our capital infrastructure at essentially free borrowing cost.
RUSH: Well, but the more the federal government borrows, then the less capital there is in the private sector.
CALLER: But there's plenty of capital in the private sector. There's trillions of dollars out there sloshing around. It just isn't being invested. Or it's being invested in third world bricks where now they're pulling back because they're afraid of crashes there. The money went to the financiers around the world.
RUSH: We're investing in third world bricks.
CALLER: No, the financiers are.
RUSH: Who? Which financiers, you mean like Henry Kravis?
CALLER: The up and rising countries that are now suffering dramatically from a capital point of view with their stock markets and currencies falling dramatically, think Turkey, think of Argentina. Think of really the risk in Russia.
RUSH: I know, the P and E ratio with the outstanding debt that is measured against cash outlays. In Argentina it's a disaster. You're absolutely right about that. No question about that.
CALLER: How would you have spent the stimulus money differently?
RUSH: I wouldn't have spent it. I wouldn't have done a stimulus. I would have cut taxes. I would have encouraged private sector production. I would have told people: go to town. Start creating, start producing, start working, start raising production rates. I'm going to lower your taxes. You're going to keep more of what you're going to earn, and then I would get out of the way and let the country recover.
RUSH: All right. Now, folks, the comments that I made to our last caller about Argentina when I was agreeing with him, I made it up. I don't even know what I said. I was just speaking in kind to the guy. I was throwing out terms that don't even go together. There is no PE ratio with the cash outflow measured against the inflow of what's happening with the outflows in the markets of Argentina. I made it up to illustrate a point.
Isn't it interesting, when Ronald Reagan was president, or George W. Bush, all they talked about was the actual numbers, the deficit is $300 billion, 300 trillion. Now all of a sudden when it's Obama we talk about the percentage of debt compared to GDP. Gobbledygook. The share of debt percentage-wise of GDP is not plummeting rapidly. It's absurd! The US national debt -- are you ready -- the US national debt is 73% of the Gross Domestic Product. I don't care what the deficit is every year. The deficit is simply an annual deficit that gets added to the national debt which is the sum total of all deficits.
We are not growing. The debt is growing. We do not have GDP growth. One percent, two percent, it's nothing. The private sector is shrinking! It's being torn apart. The private sector's being taken over by the Obama regime. Twenty percent of it, gone. They now took health care away or are in the process of it. Twenty percent of the US economy has just been transferred to Obama. The US national debt is about 73% of gross domestic product. This from the CBO last Tuesday. Seventy-three percent of the GDP is the national debt.
The percentage of debt is higher than any point since World War II. Twice the percentage it was at the end of 2007. The percentage of debt is not going down. It's skyrocketing, and precisely because of taking on new debt like the stimulus, for which we got zilch. But it was not possible to get anything but zilch from the stimulus. The only way, I'm gonna 'splain this again. It's not hard and I don't mean to sound condescending, it's just frustrating. They take simple stuff and make it so complicated that people can't understand it so they don't try and they just: "I don't want to hear about it, I don't want to hear about it. I know it's bad."
If we had a trillion dollars somewhere that we didn't have to pay for, that we didn't have to take from somewhere else, if we had a trillion dollars laying around that we could put in a syringe and inject it into the economy, then that would definitely be a stimulus. But there's a problem. We don't have a trillion dollars anywhere. We are in debt $17 trillion. Even if we borrow a trillion dollars, even if it is at zero percent, the long-term interest rates are not zero percent. We can't borrow money and not pay it back. We're not going to be able to borrow money from anybody at zero.
You think the ChiComs are going to lend us a trillion dollars and say, "Just pay us back a trillion dollars in 20 years"? What kind of nonsense is this? There's no free money. As such, there was no way to stimulate the US economy, because essentially if we're going to put a trillion dollars into it, we have to find that trillion, and it isn't laying around idly. It's somewhere. Essentially what we did is we took a trillion dollars from the US economy and put it back in and said we are stimulating, but we didn't. We didn't change it. We didn't grow the economy a penny. In fact, the stimulus shrank the economy because it artificially pumped money into places that otherwise would not have had it, union jobs and so forth.
We were lied to, left and right, about what the money was for. It was not to rebuild infrastructure. It never was for that. It was a money laundering scheme to end up some of the money in the Democratic Party, others to guarantee union jobs. It expanded the baseline of the US budget so that every budget from there on after expanded by about half a trillion dollars. That's the way the baseline budgeting works. There was no free money out there that wasn't being used. The only way, folks, you can stimulate something is if you've got free money not being used.
If you earn $100,000 a year and you're in debt and somebody comes along and says, "Here's 75 grand," and it doesn't cost you anything. There's no tax. There's no borrowing. That would be a huge stimulus for you. There's no question. But that doesn't happen, does it? When's the last time somebody gave you 50 grand? It doesn't happen with countries either. If you wanted to go borrow $50,000, you would not be stimulating your overall economic circumstance. Now, you might be able to go out and buy a bigger house or new car or whatever, but you're still faced with paying that back and it's going to cost you much more than what amount you borrowed.
This Keynesian stuff is smoke and mirrors. It just doesn't work. So this guy called, and he's obviously been reading Paul Krugman and Thomas Loopy Friedman and they're the ones running around saying: "You know what, Obama goofed. He should have done what FDR did. He should have doubled the stimulus. He didn't do enough."
If that stimulus had been $2 trillion, we would be worse off than we are now. There would not be any genuine sustained new economic activity. It's like Clinton's 10,000 cops program or whatever the number was, Clinton got into trouble so he devised this program. The federal government was going to pay for new cops to be hired in local communities. The 100,000 cops program. It was an offshoot of Midnight Basketball. Remember that? Midnight Basketball to keep the drug guys off the streets. So they just did their drug stuff in the daytime, played basketball at midnight. Didn't change a thing other than sleep patterns.
The 100,000 cops program. The federal government paid local communities whatever it took to hire two or three new policemen for the first year. The second year, the local communities had to kick in 30% of the new cop salary. The third year 60% and by year four the federal government was out of program and the local communities had to pay for the cops or the cops were gone. And what happened? After three or four years, the cops were laid off because the local communities couldn't afford it in the first place.
There was no stimulus. There was an artificial rearranging of assets brought on by the 100,000 cops program. But it was not genuine. The money behind it was not produced by genuine economic activity. The government picking and choosing who gets money and where it comes from is not genuine economic activity. It is artificial. It's picking winners and losers and there's no substance behind it. And there was no substance to this stimulus. It never had a prayer. The fact is, and the real fraud is, that most of the people behind it knew exactly what I just told you, that it wouldn't work. It was nothing more than a political play coming out of a manufactured three-year recession.
Then the financial crisis hits and that was real for all intents and purposes. So Obama comes along, "I'm gonna save it. I'm going to pump a trillion dollars in the stimulus on roads and bridges."
"Yay! Yay! He cares!" It didn't matter if they ever saw a penny of it. Obama cared. Bush didn't. Obama's trying to fix things. Obama likes us. He loves us. He's trying to fix this. Obama would go out and do his town hall meeting. "Hey, bro, when are you going to build my new kitchen?" Obama said, "See my assistant when we're all finished here." That's what people thought Obama was, or was going to do, that he had a stash. There is no stash, folks. We don't have a single dollar sitting around not being used that we can use to pump up other economic activity. This Keynesian stuff, it's never worked. It does not work.
For those of you shouting: "New Deal, New Deal." The New Deal didn't work. The New Deal exacerbated the recovery from 1929. The New Deal delayed the recovery for the exact reasons I'm giving you. It was all artificial and the purpose of the New Deal was to cement Democrat Party power in perpetuity. Santa Claus, paying people not to work, whatever you want to call it. That's what the New Deal was. It was World War II that finally brought us out of the Great Depression. It was not the New Deal.
There's not one arrow in Obama's quiver that can change this economy the way he's using it. All he's doing is adding to the debt, shrinking the private sector, slowing down whatever economic activity remains in the private sector. There isn't any growth. There isn't any exuberance. There isn't any excitement. There isn't anybody feeling up and positive about anything. Everybody's still scared to death not knowing really how health care is going to shake out. They don't really know yet when what's going to get implemented and for how long. They don't yet know how they're going to be taxed or punished or what have you.
College students coming out of college can't find a job. They've got all this debt. They don't know what to do. There isn't any unified sense of national purpose in any of our economic activity. There is an absolute total malaise out there. And if Obama's stimulus was two trillion, it wouldn't have mattered because it was artificial. It was money that didn't exist. There isn't any money hanging around we're not using that can be thrown at economic activity and actually cause it to grow. Not possible. You can't do it in your personal life. Governments can't do it. Nations can't do it. Ask Greece. Ask these clowns over at the European Union. That's what they've been trying for 30 years and they're a collective joke.
RUSH: "So, Rush, what would you do?" Look it, we've got a blueprint. We've got a blueprint that both parties are scared to death of and want to erase from your memory and pretend that it never happened. And a blueprint is Ronald Reagan. We were coming out of exactly where we are now. Jimmy Carter, this is Jimmy Carter's second term. We're actually in a little worse shape now, the misery index with Carter was higher. But Jimmy Carter was a doddering, bumbling fool. This guy that's the president now is doing this on purpose. That's the difference. I mean, he's on a mission. Jimmy Carter was just doing his standard ordinary everyday liberalism, taking his orders from Zbigniew Brzezinski, talking to David Rockefeller and the Trilateral bunch and they're going around doing their business. I'm just kidding about the latter part. I'm sorry, I can't help myself.
But there's a blueprint here. You lower tax rates. You free up capital. You leave it in the private sector and you come up with policies that are going to grow the pie. You want more people working, that leads to more tax revenue for government coffers. You want to lower people's tax rates, inspiring them to work harder to earn more money. It works! There's a blueprint for this and it led to two 49 state landslide victories for Ronald Reagan and the Republican Party, and they still try to distance themselves from it.