FNC: Stimulus Plan is Keynesian 'Hogwash'

Winston Churchill famously warned that history repeats itself unless people learn from past mistakes. As Congress debates a massive stimulus bill, critics of the stimulus plan warned about that very possibility on Fox News Channel’s “Bulls & Bears.”

Proponents of the American Recovery and Reinvestment Act tout the $825 to $850 billion plan as a panacea for an ailing economy, claiming it will create or save 3 to 4 million jobs, modernize science and technology systems, and revitalize our infrastructure.

But on “Bulls & Bears” Jan. 24, three guests argued against this plan criticizing the Keynesian concept that dumping money into a weak economy will stimulate consumer-demand and increase employment.

Host Brenda Buttner led the discussion about whether the “monster stimulus package” will create or save millions of jobs as pledged. Buttner consulted Gary B. Smith, Exemplar Capital managing partner; Eric Bolling of the Fox Business Network; Pat Dorsey, Morningstar.com’s director of stock research; Tobin Smith, ChangeWave research editor and author of “Billion Dollar Green: Profit from the Eco Revolution;” and Nancy Skinner, radio talk show host and former Congressional candidate.

Gary B. Smith called the plan a “shell game” and stated unequivocally that “This [stimulus plan] is not going to work.” He also pointed out that Keynesian spending failed to work for Franklin Delano Roosevelt, Herbert Hoover, and Lyndon Johnson. “This whole Keynesian theory? Just a bunch of hogwash.”

Skinner, a stimulus proponent, responded: “We’re all Keynesians now, Gary B.” Skinner compared the stimulus bill to the defibrillators used on a patient with a stopped heart, suggesting that a rushed and expensive stimulus package is the only option for economic recovery.

Skinner urged swift action saying, “You can’t sit around and debate this, or we are gonna slide into Depression. We know that clearly, Gary, that there -- a stimulus is what gets it going.”

Buttner objected to Skinner’s claim, saying “history shows us that spending has never gotten us out of a recession or a Depression.”

Tobin Smith sided with Gary B. Smith and explained that the Congressional Democrats’ Keynesian proposal would take too long to create jobs and wouldn’t create as many as reducing taxes. Smith explained:  “Let’s say if we cut corporate -- capital gains rates to zero for two years you would create probably 5 million jobs.”

Another guest, Eric Bolling criticized the plan on the basis that it would devalue U.S. currency and pointed out that the amount requested for the stimulus plan keeps rising. “We don’t know where its gonna end!” Bolling said, reminding people that estimates for the stimulus spending rose from $750 billion to $825 billion and warned it could go as high as $2 or 3 trillion.

According to Gary B. Smith, the stimulus plan resembles an employee asking his boss to try something that has been attempted and failed 12 or 15 times before, and the boss replying “heck let’s try it again.” Keynesian economics have not worked in the past, so why try failure again, he wondered.