Borrowed stimulus will make America's problems worse

One would be hard pressed to find a more vocal advocate for the Charleston area than Mayor Joe Riley, and as such I can certainly understand his reaction to my recent comments about it being a bad idea to try and bail out cities and states with borrowed money.

I don't begrudge him that view — after all, his job is to look after Charleston and not to look after the best interests of the taxpaying public at large. That being said, I think it's important to put these proposals for supposedly more "stimulus" in context because of their long-term implications for each of us as taxpayers.

I'd make three quick points on this front:

First, the idea that more "stimulus" is the answer is approaching the point of flat-out unbelievable. We were told by leaders in Washington last spring that if we just sent the $150 billion in stimulus checks things would get better, and we were told the same as we reached $2.3 trillion spent and committed to various stimuli and bailouts for the year. The tab for what's been committed has now crossed $7 trillion — half of the yearly U.S. economy. A group of Democratic governors recently promised that spending just $1 trillion more would be the answer.

We're in a global slowdown of the $67 trillion world economy. Is it believable that spending a fraction of a percent of that amount on building projects around the country — no matter how meritorious they may be — is going to do anything to turn around the world economy when far greater sums of money have failed to do so?

All told, Americans are already on the hook for over $52 trillion in unpaid-for political promises. That represents a hidden mortgage of $450,000 per American household, and we don't think it's right to bury future generations even further under this mountain of debt.

Second, I'd simply say that while the mayor might be an authority on Charleston's history, his grasp of what happened to get us in (and out of) the Great Depression is a little shakier.

Mayor Riley mistakenly believes that Herbert Hoover was a believer in the free market and against big-government intervention, when nothing could be further from the truth.

Amity Shales' book, "The Forgotten Man" chronicles the real history of the Depression, and it shows the consequence of pulling money from the private sector to fund large public projects. Few people know that it was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects like the San Francisco Bay Bridge, the Los Angeles Aqueduct, or the Hoover Dam.

History also shows that the Depression was prolonged and worsened by raising taxes and limiting free trade. Depression-era policies of expanding labor union power and increasing spending did little to improve the economy, as we had nearly 20 percent unemployment in 1939 — 10 years after the stock market crash.

In short, if government spending was the key to preventing recessions, then we'd never have one since increasing spending is often the default response from Washington when times are tough.

Those who don't learn from history are doomed to repeat it — and given the severity of what's happening in the economy, it's important we don't so now.

Third, we believe that this larger notion of bailouts being a first resort is threatening the very underpinnings of our economy. Our market-based system — responsible for creating 200 years of wealth in this country — is being jeopardized by this ever-increasing universe of bailouts.

Each bailout leads many who work hard and take prudent risks to wonder in some ways why they should work hard while Washington strays toward a political economy where you need the right lobbyists or a loud voice to be heard by Congress.

I suspect that if cities and states are ultimately given some form of stimulus, the dictates from Washington in how that money is spent will be based far more on political pull than on merit.

That kind of cronyism is what largely got us to where we are in the first place, and is the same force responsible for paying $100 million to the connected few who ran organizations like Fannie Mae in Washington. Politics drove a big part of what has happened in our economy.

The bottom line is this — issuing debt on top of debt to solve a problem created by too much debt threatens both the financial strength and the sustainability of our country. If we want to build infrastructure projects, that's fine - just don't do it with borrowed money.

"Economic stimulus" is more than simply borrowing money and sending checks out of Washington. It is about making sure that our country's finances are on stable ground so that our real source of economic stimulus — the American entrepreneur — isn't paying for today's political quick fixes for generations to come.

Mark Sanford is governor of South Carolina.