I know we still have nine months to go before Election Day, but I may already have a winner for my "Understatement of the Election Season" Award. Right at the end of his big economic speech last week in Wisconsin, Democratic front-runner Barack Obama, last night's big primary winner in that state, said the following:
In the end, this economic agenda won't just require new money. It will require a new spirit of cooperation and innovation on behalf of the American people. We will have to learn more, and study more, and work harder. We'll be called upon to take part in shared sacrifice and shared prosperity.
Let's stick with that "new money" part for a moment. For starters, that "new" money is, of course, "your" money, your tax dollars. And it's a lot of money. Obama has proposed a couple of hundred billion buckaroos in new government spending along with new tax increases. But Obama may have just been getting started. Back in December, Obama sponsored the "Global Poverty Act," a bill that proposed the following ( Efharisto to the American Thinker for spotting this one):
To require the President to develop and implement a comprehensive strategy to further the United States foreign policy objective of promoting the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the [U.N.] Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day.
What this bill would do, in short, is commit the United States to the U.N. declared goal that industrialized countries should spend 0.7 percent a year of their gross domestic product on foreign aid. Over the next decade or so, that would work out to around $850 billion. When the bill passed the Senate Foreign Relations Committee last week, Obama said that "as we strive to rebuild America's standing in the world, this important bill will demonstrate our promise and commitment to those in the developing world. Our commitment to the global economy must extend beyond trade agreements that are more about increasing corporate profits than about helping workers and small farmers everywhere."
How to pay for our penance? Economist Jeffrey Sachs, an advocate of this idea, has a suggestion:
We will need, in the end, to put real resources in support of our hopes. A global tax on carbon-emitting fossil fuels might be the way to begin. Even a very small tax, less than that which is needed to correct humanity's climate-deforming overuse of fossil fuels, would finance a greatly enhanced supply of global public goods.
So not only does Obama want to raise taxes on Americans making over $250,000 a year and eliminate the $102,000 wage cap on Social Security taxes, he perhaps wants to tack on another trillion dollars in taxes to pay for dramatically increased foreign aid. Of course, we could just borrow the money. Obama, after all, has not stressed balancing the budget during this campaign, instead promising to eventually put the budget on a "pathway" to being balanced.
And would such a commitment of money work anyway? Here is what Sachs critic William Easterly, an economic professor at New York University, wrote in the Journal of Economic Perspectives in 2003 on the topic:
Aid agencies have misspent much effort looking for the Next Big Idea that would enable aid to buy growth. Poor nations include an incredible variety of institutions, cultures and histories: millennia-old civilizations in gigantic China and India; African nations convulsed by centuries of the slave trade, colonialism, arbitrary borders, tropical diseases and local despots; Latin American nations with two centuries of independence and five centuries of extreme inequality; Islamic civilizations with a long history of technical advance relative to the West and then a falling behind; and recently created nations like tiny East Timor. The idea of aggregating all this diversity into a "developing world" that will "take off" with foreign aid is a heroic simplification.... The macroeconomic evidence does not support these claims.... The goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past. But the appropriate goal of foreign aid is neither to move as much money as politically possible, nor to foster societywide transformation from poverty to wealth. The goal is simply to benefit some poor people some of the time.
Another option proposed by geopolitical strategist Thomas Barnett, who advocates that the United States partner with China and India to create a heavily armed global peace corps (our expertise and firepower, their manpower) to bring security to failed states in Africa and elsewhere across the globe. With a relatively safe environment established, private direct investment could then pour into those countries.