This is what FDR’s Treasury Secretary Henry Morgenthau wrote in his diary in the depths of the Great Depression after years of explosive spending, rapidly increasing debt, enormously high unemployment, rising taxes and tax rates, and drastic intrusion of government controls into our economy:
We have tried spending money. We are spending more than we have ever spent before and it does not work. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.
Although slow to (re)learn the lesson, Morgenthau wasn’t the first to articulate the failure of government spending to accomplish much of anything good. Ludwig von Mises had some remarks on the matter, too.
When the government spends more, the public spends less. Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens.
It is obviously futile to attempt to eliminate unemployment by embarking upon a program of public works that would otherwise not have been undertaken. The necessary resources for such projects must be withdrawn by taxes or loans from the application they would otherwise have found. Unemployment in one industry can, in this way, be mitigated only to the extent that it is increased in another.
Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other.
A policy of deficit spending saps the very foundation of all interpersonal relations and contracts. It frustrates all kinds of savings, social security benefits and pensions.
Now contrast that with what the present administration has done, and the wonderful effects that explosive spending, rapidly increasing debt, enormously high unemployment, the constant threat of rising taxes and tax rates, and drastic intrusion of government controls into our economy have had on our economy and on jobs for Americans.