January 28, 2011

Government's Return on "Investment" is Pitiful

Veronique de Rugy

Senior Research Fellow

President Obama’s proposals to increase competitiveness through investing in education, innovation, and infrastructure are not only a repeat of SOTUs past, but also just a different label for more government spending.

Every year, presidents talk about how government can help the economy by investing money, and each time this "investment" fails to bring the promised results. Just throwing more money at these programs doesn’t change anything. Look at transportation spending, which has increased by $36 billion (not counting stimulus money) over the past 10 years. What do we have to show for this increased spending? Bad roads and more debt.  Congress also "invested" $1 trillion to stimulate the economy and create jobs. What do we have to show for it? High unemployment, failed promises, and even more debt. The return on investment has been pretty pitiful.

One thing government can and should do to promote American competitiveness is reform the tax code. It is our tax code that puts domestic firms at a clear disadvantage, not a lack of skill or innovation on the part of the American worker.