Chris Matthews: Government Spending Stimulates Economy Not Tax Cuts

February 16th, 2011 9:36 AM

President Obama and the Democrats have spent trillions of dollars in the past two years without successfully growing the economy enough to produce jobs.

Despite this immutable fact, MSNBC's Chris Matthews on Tuesday's "Hardball" said government spending is a far better stimulus than cutting taxes (video follows with transcript and commentary):

MATTHEWS: Welcome back to HARDBALL. President Obama is taking heat from members of his own party for his plans to cut funding for Community Development Block Grants and home heating assistance for the poor. So, why is it OK to give tax cuts to the wealthy but scale back on programs that are clearly valuable to the country and have proven to work?

Chris Cillizza is an MSNBC political analyst and editor of, and Errol Louis is the host of New York 1’s "Inside City Hall." Errol, thank you. We haven’t had you on for a while. Cillizza has been on more recently. So, I’m going to go to Errol.

Let me go to you.It seems to be that all those who studied economics in school understood what stimulus is. When the government spends money, people are getting their paycheck, they go to the corner store, they spend the money, they got to the corner store, the woman there, she spends the money. The money gets multiplied, and gets the money moving. And especially among poor people who live right up to the edge, in fact, beyond the edge in terms of economics. It’s vastly stimulative.

Rich people on the other hand, when they get a tax break, put it away. They don’t need the money a lot of cases. They put it -- they sock it away in whatever accounts they’ve got. They might try to find something to invest in, but it’s not going to stimulate the economy right away.

Why is the president supporting tax cuts to the rich as part of this deal coming in its term, this Congress -- cutting programs that clearly will be spent 100 percent dollar for dollar?

Since the Democrats took over Congress and the recession began in 2007, our nation's deficit has risen from $160 billion to $1.65 trillion. That's a ten-fold increase.

Our on-budget spending - meaning not including Social Security and Medicare - has gone from $2.3 trillion to $3.3 trillion in those four years, a staggering 43 percent per annum rise.

After adjusting for inflation and population growth, we are now spending almost $1 trillion more than we did in 1945 at the height of World War II.

Given this explosion in spending, if Matthews is right, shouldn't our economy be going like gangbusters now?

Apparently not. Unemployment in September 2007 was 4.7 percent. Trillions of dollars of newly-printed red ink and debt later, it stands at 9.0 percent.

But Matthews, like New York Times columnist Paul Krugman, wants more spending.

Didn't they learn anything from Presidents Kennedy, Reagan, George W. Bush or even Bill Clinton who all proved that when you cut taxes, the economy almost immediately responds?

Not surprisingly, folks like Matthews typically ignore the fact that the best economic years in the '90s came after Clinton finally agreed to tax cuts the Republican Congress had been urging for two years.

These are the same kind of economically-challenged dimwits who think the tremendous expansion that began in the '80s was caused by tax hikes, or believe unemployment benefits are the best kind of stimulus.

And Paul Krugman wonders why voters are so ill-informed.