Is our economy ailing from too much government, or not enough? Two prominent Republicans disagree | Bleader

Is our economy ailing from too much government, or not enough? Two prominent Republicans disagree


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Big government is the problem, the cause of our economic woes, says House majority leader Eric Cantor. Big government is the solution, says Bill Gross, the billionaire co-chief investment officer of the giant bond fund Pimco. Both are Republicans.

President Obama's "anti-business, hyper-regulatory, pro-tax agenda has fueled economic uncertainty and sent the message from the administration that 'we want to make it harder to create jobs,'" Cantor wrote in yesterday's Washington Post. Raising taxes now, Cantor said, "would negatively affect the businesses across America that we are counting on to get our economy going."

Cantor blasted Obama's "efforts to incite class warfare:" While "he often talks about millionaires, billionaires and corporate jet owners paying their 'fair share,' behind closed doors the president admits to wanting to raise taxes on individuals making $200,000 per year and families and small businesses earning $250,000 per year."

Obama wants to raise taxes because of his "desire to permanently increase the size of government—a philosophy that most Americans, who already think the government is trying to do too much—do not agree with," Cantor wrote. Instead of "more wasteful stimulus spending, we should go all-in on ways to invigorate growth" in the private sector, he said. "Economic growth will help reduce the deficit and get people back to work."

In a letter to investors in July, financier Gross called for much more stimulus spending than Obama has been suggesting—a view he reiterates, while underscoring the need for tax increases, in today's New York Times. In 1999, Gross predicted the bursting of the dot-com bubble that occurred the following year; in a 2005 letter to investors, he warned of a coming subprime mortgage crisis.

"Conservative or even liberal agendas that cede responsibility for job creation to the private sector over the next few years are simply dazed or perhaps crazed," Gross wrote in July.

He called for an infrastructure bank to fund reconstruction projects, and "clean/green energy investments...most of which require government funding and a government thrust in order to create millions of jobs." Government "must temporarily assume a bigger, not a smaller, role in this economy," he wrote, "if only because other countries are dominating job creation with kick-start policies that eventually dominate global markets."

Gross invoked the late economist Hyman Minsky: "'Big Government,' [Minsky] wrote, should become the 'employer of last resort' in a crisis, offering a job to anyone who wants one—for health care, street cleaning, or slum renovation. FDR had a program for it—the CCC, Civilian Conservation Corps, and Barack Obama can do the same."

"Deficits are important, but their immediate reduction can wait for a stronger economy and lower unemployment," Gross wrote. "Jobs are today’s and tomorrow’s immediate problem....Government must step up to the plate."


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