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  • Morning Bell: The Government Spending Threat to Economic Freedom

    This morning, The Heritage Foundation and The Wall Street Journal released the 2011 Index of Economic Freedom, and while the news is good for many countries, it is depressing for the United States. All told, 117 countries, mainly developing and emerging market economies, improved their Economic Freedom Index score. Meanwhile the U.S. dropped to 9th place, remaining “mostly free,” weighed down by the burden of President Obama’s spending spree.

    Of course, we should all celebrate the improving lot of many impoverished people across the globe. The data in this year’s Index again confirm the strong correlation not just between economic freedom and higher per capita incomes but between higher economic freedom and overall well-being (which takes into account such factors as health, education, security, and personal freedom) as well. The Index shows that freer societies reduce poverty at nearly twice the rate as less free societies do.

    The United States, however, is no longer “the Land of the Free” economically. Our Economic Freedom Index score fell to 77.8, moving us down to 9th internationally behind such countries as Denmark, Canada, and first-place Hong Kong. What drove America’s decline? Huge increases in government spending. Despite obvious past failures of Keynesian spending policies in countries like Japan, the U.S. government undertook a massive government spending spree designed to combat unemployment and spur economic growth. This Keynesian stimulus has proved to be an abject failure: Unemployment is still above 9 percent for a post–World War II record 20th month in a row, and economic growth has not returned as strong as the Obama Administration predicted.

    This spending, more than any market factor, poses the greatest risk to American economic dynamism. Relying on government spending to create growth not only has failed to reduce unemployment but has also prolonged the crisis by hampering private sector investment. Bloated government debt has turned the economic slowdown into a fiscal crisis, with economic stagnation fueling a long-term employment crisis. And the Index shows that this truth applies to many other countries as well: Index data show that countries with the highest levels of government spending had growth rates 4.5 points lower, on average, than countries where government spending was under control.

    But there is still hope. Across the world voters are beginning to reject big government spending ways and embrace economic freedom. In the United Kingdom, which has dropped all the way down to 16th place from the top 10 in only two years, voters tossed out the profligate Labour Party in favor of Prime Minister David Cameron’s austerity-promising government. And here at home, the Tea Party movement has said “enough,” electing a Republican House of Representatives that has promised to rein in the Obama Administration’s reckless spending.

    Over the past 30 years, freer economies have fueled unprecedented economic growth around the world. From 1980 to 2008, the world economy achieved real GDP expansion of around 145 percent, lifting hundreds of millions of people out of poverty. Globally, poverty has fallen by 40 percent since 1990. The United States can continue to be a leader of this prosperous free world, but first we have to get our own bad spending habits under control.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    44 Responses to Morning Bell: The Government Spending Threat to Economic Freedom

    1. LibertyAtStake, Alex says:

      What will happen to next year's ranking if the Left succeeds in capitalizing on the crisis du jour to have the 1st & 2nd Amendments shredded?

      "Because the Only Good Progressive is a Failed Progressive"

    2. Ken Jarvis - Las Veg says:

      1-12-11 FROM – Ken Jarvis – LVKen7@Gmail.com

      Ben C. Ann Arbor, MI on January 11th, 2011 at 10:33am said:

      As I posted yesterday when gas hits $5.00 per gallon Bush will be blamed. Ken Jarvis will blame Murdock and it will be everyone else’s fault – but not theirs or the “left.”

      Keep it up Obama and you WILL be a one term president.

      *** If Gas gets to $5.00 I will blame Big Gas.

      Supply and Demand did a LONG Time ago.

      Now it is WHO controls the Supply.

      All of Big Gas follows Exxon's lead.

      When THEY go UP – ALL go up.


      Everyone should look at Rush Limbaugh's site

      to get the FULL Flavor of HATE
      The Democrat Party Turns Jared Loughner into a Victim of the Right

      No Labels Types See Golden Opportunity in the Tucson Tragedy

      Pima County Needs a Real Sheriff

      Stack of Stuff Quick Hits Page

      » Halperin to Conservatives: Turn the Other Cheek

      » Patrick Kennedy Connects Shooting to Obamacare

      » Lawmakers Consider Curbs on Free Speech

      Rush is the LEADER of the GOP

      Murdoch's Empire is the Voice of the GOP

    3. Mary............WI says:

      The way I see it Obama may have gotten a bump in his ratings for not raising taxes (hah) but it's nothing more than a game he's playing. A mind set like his doesn't change over night if ever. It's important Obama NOT be re-elected in 2012 because if he is he will continue on his path of destruction of the USA. We need someone in the White House that has respect for the American people, the constitution and the greatness of the USA. Obama does not fit these qualifications.

    4. Roger TN says:

      Four years of Democrat Congress and two with White House and Democrat in the majority. No telling what they could have accomplished if they had not been brought up short last November. Also, no telling how long it will take to recover from the economic mess that was perpetrated and exagerated by the liberal/progressive agenda during this time. Come on 2012.

    5. George Colgrove, VA says:

      The nickel and dime approach to spending cuts thus far presented will do nothing to increase our position on this chart. We have fallen in this list long before Obama. Yes, Obama's spending is driving us into the grave, but this trend was instigated 9 years ago with the “money is no factor” approach to fighting terrorism. This disease infected all departments in the federal government and caused a massive increase of the size of the federal government by nearly a million federal employees (all at an average compensation package of $123,000) and the District of Columbia got rich from it! Regulation on us went out of the ceiling.

      This data is embarrassing for the US. We should always be number one on that list. Even if we do not add another dime to the debt and even if we start the long and arduous task of sweeping the federal halls of the rubbish the federal workforce left behind, we will continue to fall on that list for years to come just by the heavy inertia of the abuse inflicted on the American people.

      As we speak, we are not paying off the interest on the debt. To cut spending to a level where we end debt spending would require a near $2 trillion dollar cut to the CURRENT federal budget (a budget we already spent nearly half of). We cannot raise taxes – there is no more money left in the hands of the people (another factor why we are falling on that list.) This means we still need to cut even more to start paying off the debt. To become self-sustaining and begin on the very long path of paying off the national debt, the government will need to be somewhere between 30% to 40% of its current size. It also needs to end disastrous regulations to help spark the economy.

      The partying is done – the feds have had their fun. They spent like no nation has ever spent. The money flow in DC entering the greedy pockets of the federal workforce and congress is now finished. It is time we take the sobering look at the mess – the destruction – laid upon this land by the folks who asked us to trust them in a time of crisis. We the people are now burdened with the task of cleaning up from the drunken greed of government workers from congress to the mailroom. It is over.

      So far, congress is not sounding like it wants to make the demanding cuts that are necessary to keep this ship afloat. The HF has presented simple and easy to implement cuts that can remove upwards of $400 billion from the budget – TODAY! Congress does not even have to do the impossible task for them – which is thinking. Just use the precious hours today and start going over the HF's proposals – make them law and vote. There is still time to make these cuts. Then in 2012 do some serious slicing of the budget. We really do not have a choice!

    6. Pete, Houston Texas says:

      Copied from above. "Despite obvious past failures of Keynesian spending policies in countries like Japan, the U.S. government undertook a massive government spending spree designed to combat unemployment and ***slow economic growth***". I don't think they spent all that money to slow economic growth on purpose, it was the end result.

    7. B. Hall Syosset N.Y. says:

      When I studied economics in the 60.s The Keynesian model was very much in fashion. However in case after case it has been a failure. In fact when asked :what if your theory turns out not to worl Keynes replied "what difference does it make we will all be dead by then" By that he meant it will take so many years to find out if the theory is correct he will not be alive to know. He was wrong. It does not take that long. It has only taken 2 years to find out that Obama's use of the model is a failure.

    8. Dan Montano, Wethers says:

      Is there a way you can get republican leaders who get air time, to educate the electorate with your information? I read you and Kiplingers magazine. It seems the two of you have the most sensible solutions to our problems and I don't understand why our conservative elected leaders don't use you to further these goals, which obviously work and to combat Obama's failed policies.

      Many people I talk to know liberalism is wrong, but they are afraid of too much conservatism, ie we want the poor to die and go away. Which tells me we always have to tell people how much money we are spending on the poor and how it has failed.

      • Brandon Stewart Brandon Stewart says:

        @Dan: Thanks for your comments. Educating members of Congress (of both parties) is definitely one of our top goals here at Heritage. Rest assured that we're doing all we can to get the word out — and we appreciate your help in doing so.

    9. Blair Franconia, NH says:

      I'm sorry to disagree with you but you're wrong. The American Dream is dead. It was

      put on life support in 2007 and the plug was pulled in 2009. We're going the way of

      Japan. We've entered our own "Lost Decade." China overtook Japan to become the

      world's second largest economy. China's on its way to replacing us as the world's largest economy within nine years. We're like the PIIGS of Europe. If we had a President more like Ronald Reagan, which we don't, unfortunately, we could have avoided this. If we aren't careful, we could end up like Greece with rioting in the streets over jobs people think they're entitled to. Didn't China get rid of the "iron rice

      bowl" back in the '70s? Here's a thought, instead of raising the income tax to 66% in the dead of night like the Kleptocracy of Illinois did, why not cut it? Why not cut taxes by 50% back to where they were when Reagan was President? Cut everything by 50% including defense spending until we've dug ourselves out of this

      hole. And speaking of holes, there's something in politics called The Law of Holes.

      The Law of Holes says: When you're in a hole, stop digging.

    10. Bill Brownfield says:

      Great analysis and recommendation. Let us hope the powers to be read and act appropriately.

    11. Yellowbird says:

      A key factor in growing our economy in 2011 depends on changing Obama's anti-drilling agenda. Bloating energy costs for ego saving or filling foreign coffers is the absolute last thing America needs. Lifting moratoriums on drilling, only to reject all permits is kids play, killing jobs and continues the past two years of destruction to our country.

    12. Damian Hockney, Lond says:

      You mention the UK, and it is unfortunate but the promises of the new Government are in fact false – what is curious in all of the hysterical discussion about "cuts" in the UK media is that not one commentator has come to grips with the fact that the Government intends to spend MORE over the next four years, as is revealed by its own predictions. What is happening is that moneys from some things are being cut, while others (eg new billions spent on advice for climate change for the third world) are set to rise massively. At the end of the day, the U Government is shuffling the chairs on the Titanic. And of course, the European Union is the motor for much of the demands for new spending, including its stated intention that it will carry on increasing spending to extraordinary levels. Remember, that 80% of UK laws and regulations are made by the EU and no UK government is allowed to amend, alter or devolve from them. And the Government in the UK has made clear that all it will do is precisely nothing about this. Do not look for the UK to be getting back intro the Top 10 any time soon…

    13. steve ryan OKC Oklah says:

      Why do you folks insist on blaming this crisis on only Obama ? Didn't this start under W Bush , with his new healthcare entitlements and not stopping Barney and Todd ? then finally saying have to use non capitalist means to save capitolism ? He paved the way for Obama. You folks lose credibility with the center when you play this game :( We conservatives are supposed to be the adults but if we are weak we just give the Libs the green flag to spend us into infinity , why do we compromise then whine at results ?

      • Brandon Stewart Brandon Stewart says:

        Steve: We've been publishing the Index for 17 years and Heritage itself has been in existence since 1973. We've had no shortage of criticisms and advice for politicians of both parties. The issue is less about who is to blame and more about what we do to fix the situation!

    14. Leon Neisius says:

      I've felt for quite some time that things were wrong with our economic system. I now understand much better what they are, why they occurred, and how to fix things after reading John C. Medaille's book, "Toward a Truly Free Market". Most conservatives think that we just have to somehow cut back the size of the government and good old capitalism will make things much better. Mr. Medalille shows that it's not quite that simple. However, we can look forward to a much better future if we understand some basic principles and apply them. It's called "Distributism".

      He demonstrates that "Distributism", built upon the social moral principles of The Common Good, Subsidarity, and Solidarity is an answer. I can't begin to do justice here to the refreshing ideas expressed in this book. I strongly recommend that we the people discuss these ideas in a national forum. They present a way to provide prosperity with freedom!

    15. Judith in Michigan says:

      The United States will again become the leader of the prosperous free world ONLY when our government is returned to "We The People" and the Socialist cancer invading our country is routed out.

      Obscene spending and debt; rise in dependence on government hand-outs and government control of our every day lives and the rapid take-over of American private industry is all a deliberate, well orchastrated effort to Fundamenatly Transform The United States of America. We were told this was the goal during the last presidental campaign. But we failed to ask "Transformed to what?" I'm afraid the answer was "To a European-style Socialist country.".

      We are continuing to fall further behind every single day. Is this acceptable to you? If you think this is a preposterous notion, then you really aren't paying attention.

    16. Bruce, Ohio says:

      Our government is lying to us about the unemployment rate. It is NOT 9.4% as they state, it is probably more like 15%. There are many people who have only worked part-time jobs for short periods of time and were laid off because of a drop in sales. Majority of these people don't qualify for unemployment benefits. They try to find another job, but can't. My son is one of those people. He has been unemployed for almost 2 years. How many thousands are in the same boat? Yes, the American dream IS dead and will never recover!!!!!

    17. Mike, Chicago says:

      The 30 year experiment with the Voodoo Economics that started back in the Regan has worked like it was designed to, it's transfered wealth to the wealth to the wealthiest and left the rest of the country to fend for themselves. The US will continue to fail economically as we follow the same path the Soviets did in Afganistan – what a legacy to pass on to the next generation.

    18. B. Hall Syosset N.Y. says:

      What Steve Ryan does not know is that Bush and Mcain supported a bill to restrain Freddie and Fanny that was defeated by a fillabuster in the Senate by Chriss Dodd of Ct. And it was in Fact under Clinton the The CRD was formed Community Redevelopment Act. This was formed so that everyone could have their own home whether they could afford it or not. This eventually lead to the economic colapse from which we have as yet not recovered. Read your history before you spout off your mouth.

    19. toledofan says:

      I think that the Japanese model of the 1990's showed that pouring money into the economy was a bad idea. I thought they, the Japenese, called the 90's the lost decade? I guess we don't learn from history. Anyway, isn't the real problem the policies and ideology of the left trying to actually destroy our economy so it can be rebuilt? It took me a while to finally grasp the idea that there are people within the Democratic party that want America to fail, to go broke, use no fossil fuels, and be like everybody else; a ruling class versus everybody else. When you look at the last 2 years in total, it's been one debacle after another; tarp, stimulus, healthcare, the gulf, the Xmas bomber, the Arizona boarder, the beer summit, repeal of DADT, and there are many others. Thank God for places like Heritage, Fox and talk radio. Without these the left would be succeeding rather than being tossed back on it's heels.

    20. Lee, Los Angeles, CA says:


      With today’s economy in such jeopardy, we believe it’s time to go back to the tried and true principles of

      American capitalism which built this great country. Although we live in a country which exemplifies

      free enterprise, most schools don’t teach students how to succeed in our capitalist system, and most Americans

      don’t have a clue as to how a product gets to market.

      With nearly 10% unemployment in America, jobs leaving the country,

      and a scarcity of jobs available within our country,

      self-employment is the answer to creating jobs, and rebuilding our economy.

      We are offering a free video presentation at
      which shows viewers how to build their own business.

      The proven methods offered in this video are based

      upon our own experience of manufacturing and marketing over 20 million of our own products …

      ranging from toys … to household items … to art prints … to insecticides … to sporting goods.

      Our company was built using our own innovative entrepreneurial methods.

      This enabled us to make each dollar spent dot he work of 50.

      Although we never had more than a handful of employees

      at any given time, we were able to take substantial market share

      from companies hundreds of times our size.

      In the beginning, we used these methods out of necessity,

      however , even after we took in tens of millions of dollars,

      we continued to apply the same methods, regardless of what we

      were selling.

      After several decades of successful manufacturing and marketing,

      we diversified into teaching others how to build a business of their own.

      To date, we have shown over two million people how to build their own

      business, in their own field of interest, with little or no money, even if

      they had never been in business before.

      “When you give a man a fish, you feed him for a day …

      When you teach a man to fish, you feed him for life"

    21. Wayne, Louisiana says:

      The next big bulge will be the implementation of the health care bill. It is very possible to change the current health care system by providing catastrophic coverage to people whose limit exceeds a certain threshold. This could be handled in the same manner as flood insurance. Each insurer would offer the coverage to the people and then would be responsible for the maintenance and management of the coverage.

    22. Earl, QUEENS, NY says:

      Likewise, I did see something on the Yahoo home page this morning about BHO’s approval rating inching back up due to the (improved?????) economy, and I’m far from silent on that. Despite what drones or naïve liberal morons, et al, may think, we need to consider the facts. 1st, the economy still is very ill. The unemployment rate is still above 9%, and it has been for 20 months, the longest since the Great Depression. And the latest figure doesn’t take into account all the discouraged seekers who gave up looking for work. 2nd, the economy has been very ill for over 2 years, including the nearly 24 months in which BHO has been POTUS, and since the disastrous election on 11/4/2008, presumably reacting because many investors and businesses knew what a disaster BHO and his democraps would be. 3rd, we know BHO’s policies have failed. E.g., we know that his projection that the costly failed stimulus/porkulus bill passed some 2 years ago would keep unemployment no higher than 8% was wrong!! It’s been way over that since the crapulous bill passed!! Finally, perhaps Wall Street and businesses now have more faith. That is, they see that the new GOP House will stop the advancement of BHO’s Marxist agenda. To all the naïve American voters, what I’m saying is that if there’s any improvement in the economy between now and 1/20/2013 (which will hopefully be the end of an error!!), it will be IN SPITE OF OBAMA, not BECAUSE of him!!

    23. Pingback: Tweets that mention Morning Bell: The Government Spending Threat to Economic Freedom | The Foundry: Conservative Policy News. -- Topsy.com

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    25. Leon Lundquist, Dura says:

      The Demolition Plutocrats are controlling the dialog again, so that nothing of substance can be said. They've got the Economy rigged so they win either way. They'll swamp the Republicans with big nothings! But Economy is a matter of Liberty as much as it is a matter of National Defense. The rhetoric on the Right should go up a notch, the exact opposite of what the RINOs are pushing. Big nothing, it wasn't rhetoric that caused recent violence but the dialog box was too quickly set. Amazing! Somehow violence is Talk Radio's fault? The Progressive Agenda is so bad they are shameless about denying Americans free speech! Obama is still attacking our Economy, full steam ahead! Let's tone up the dialog! Hey! Rush is right! Sarah is right! Glenn is right!

      Don't play patty cake with the Demolition Plutocrats! Prosecute them. Justice is the only thing that works on violence. Real, honest to God American Justice! There won't be any violence but what the Progressives have made. Justice works in Economics too. The House of Representatives can give us Justice for what Obama's Shadow Government does, ruining our Economy. Behind the wall paper journalism Illinois secretly raised taxes 60%, highest in the world! In the dark of night! Shhhhhhsh! These guys lied their way into Office. They are not the loyal opposition. They mean to destroy the Economy, so none of the toned down explanations make sense!

      Communism is unlawful! It is an Unconstitutional Form of Government! Pick up what Rush is saying! Say it louder. Sarah has been in the Progressive cross hairs for years. She has to be right or Progressives wouldn't hate her. The same with Glenn Beck. Turn up the heat!

    26. John, Tennessee says:

      God's inspired economic analysis remains inflexible: "The rich rules over the poor, And the borrower is servant to the lender" (Proverbs 22:7 NKJV). The way to enslave any nation is to take away its wealth. All government(s) spending above their citizens' ability to pay enslaves the populace. This applies, whether city, county, state, federal, or other national government is addressed. If America is the biggest debtor nation on earth, it is the most enslaved people on earth. Credit digs the hole, creditors can close the hole and call it a "grave." How blind are those who grasp for power at the expense of those who work for their living, for: "the profit of the land is for all; even the king is served from the field" (Ecclesiastes 5:9 NKJV). Never forget, the power of any country is in the work of its own populace. Punish business, and destroy the country!

    27. Ben C. Ann Arbor, MI says:

      Ken Jarvis – you are partially correct about supply and demand. However, the futures market also plays a big role in gasoline prices. We have plenty of reserve, just not the opportunity to use it. Thus "Big Oil" can use this to their benefit. Open up the vast resources we have and watch the price drop and the Middle East get real crabby when our petrodollars are gone. The Arab countries have far more at stake than "Big Oil" – just follow the money trail.

    28. Tom K Houston,Tx. says:


    29. Dave says:

      Hong Kong is Number One. Who would have thought that the freest economy in the world would be controlled by the Chinese Communists? Maybe freedom and democracy don't go as well together as we all had hoped.

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    31. Bruce J. Kolinski says:

      It's a shame the average Progressive is deaf, dumb and blind.

      It's an even greater shame that fully half or more of our entire Federal government apparati is bloated with them.

      I hope we're learning something, but from my perch here in Arizona, it appears a bit grim.

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    33. Mike, Chicago says:

      Why do we continue to give aid to these emerging countries?

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    35. Pingback: Bahrain among top 10 in economic freedom – Gulf Daily News – BIGJUNCTION.INFO

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    38. Dinah Garrison Fairb says:

      I know everyone has some issue they don't want touched in the cutting. However, I have to just remind all of us: if we are unable to defend our country, NONE of the other issues will matter. There are probably defense areas that can be adjusted, but with the climate (Oy! Not warming. Political climate.) the way it is today we need to be very careful. The Mid-east seems to be warming up for another go-around, North Korea feels petulant, and China is ticked with us–more than usual. Go slowly here.

    39. Judy says:

      Don't forget that Loughner abused drugs…mairijana "Pot Head" per many articles and supposedly also went on to use harder drugs. Why is this being ignored by media, whether conservative or liberal?

    40. Dr. Henry D. Sinopol says:

      The cost of government spending includes supporting life-long politicians. Heritage should work to open an honest dialogue with representatives who do not see themselves as career politicians. The Founding Fathers never envisioned a body, bloated by self-interest and personal gain.

      If you want to reduce spending, reduce the tenure of life-long politicians. No wage increase once elected, term limits, no life-long pensions and all politicians must participate in the same system they expect the public to live with.

      We are the greatest country in the world and must live withing all legal limits to perserve our nation…no violence, disorder or harm to anyone.

    41. George (Oldguy), Wes says:

      Tom K… Perjury and fraud indeed. In my opinion it is committed when politicians take their oath knowing that they will not adhere to the Constitution. Is that fraud or perjury? If so here is a section from the US Code:

      An individual, except the President, elected or appointed to an office of honor or profit in the civil service or uniformed services, shall take the following oath: ''I, AB, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.'' This section does not affect other oaths required by law.

      'Any person who shall falsely take the said oath shall be guilty of perjury; and, on conviction, in addition to the penalties now prescribed for that offense, shall be deprived of his office, and rendered incapable forever after of holding any office or place under the United States.'

      So does this apply to the 'Are you serious?' crowd of legislators? If we need to find out how to get it enforced!

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