I have two stories that don’t mesh.

They just don’t go together.

The first is about Obama eying a $300 billion tax cut. On its own it sounds like a good story. We’re in a recession, history has proven that a tax cut is the best stimulus.

However the second story puts a damper on the first. It’s about Obama wanting to add 600,000 government jobs.

Put them together and you’ve got the death of common sense. That’s right common sense officially died today, its tombstone reads:

Common Sense
b: The Beginning of Time
d: January 4, 2009

I’m confident that all of you understand why those two stories don’t make sense, however, for those that don’t get it allow me to explain.

600,000 more government jobs means 600,000 more salaries the government has to pay.

A $300 billion tax cut means less revenue for the government to pay those salaries.

Couple that with our already huge deficit and the natural loss of revenue the government will see because of the recession and Obama’s plan spells disaster.

The tax cuts being “eyed” aren’t even that appealing. Most aren’t even cuts, they’re credits that are disguised as cuts. As far as I can tell Obama doesn’t seem to be “eying” a single rate decrease.

Government spending doesn’t spark the economy. History has proven that. Eight years after Roosevelt passed the New Deal unemployment was still in double figures. It didn’t hit single figures until nearly 10 years after the bill was passed, and that’s after many of his new government programs had been repealed.

Before the Great Depression we had the roaring 20′s. We learned in high school that the 20′s were a great time to live in; people were prosperous, the stock market was on the up, and unemployment was low. However, your history teacher probably didn’t explain why the 20′s were “roaring.” It was because taxes were low as well.

Andrew Mellon was the Treasury Secretary under both Coolidge and Hoover. Mellon thought that taxes were too high. At the time the income tax only applied to the rich and the top rate was 73%. Mellon saw this as a drag on the economy, he petitioned to have the rate lowered. And it was, along with many other tax rates.

The result was near 1% unemployment and a massive boom in business. Of course all good things must come to and end and a recession struck the states. The stock market had simply gotten too inflated, too high, and it crashed. The government response was weak. Hoover and Congress decided to enact the single largest peacetime tax increase in American history, and then FDR decided to throw money at the problem.

And that’s what made the Great Depress great; high taxes and excessive government spending.

But here we are, 70 years removed from the Great Depression and we still haven’t learned our lesson.

Obama’s plan, outside of going against what history tells us is correct, simply doesn’t make any sense.

Common sense tells you that tax revenue will decrease in a recession. People aren’t making as much money, they’re not cashing in on assets, and unemployment is higher. The same goes for business; most business see a drop in sales and thus a drop in revenue.

Those businesses contract, they lay off workers, they drop products, they find ways to save money. Or in the case of larger businesses they simply weather the storm and dip into what they have in the bank.

Obama’s plan goes against conventional wisdom.

Instead of shrinking the government, he’s expanding it. Instead of conserving cash, he’s spending it.

The plan spells trouble. History has proven that.

–jb