“You can’t spend your way to prosperity’ (or, “You can’t borrow your way to prosperity”) means that the federal government can’t achieve prosperity by accumulating a large deficit to spend lots of public dollars, or by printing money and spending it. The proponents of this phrase often argue to cut federal spending, or to cut taxes and excessive regulations to encourage private business.
 
The saying was popular in the 1930s, during the Great Depression.  Former President Herbert Hoover said in 1936: ““One time I told a Democratic congress that you cannot spend your way to prosperity.” Presidential candidate Ronald Reagan said in 1976: “You cannot spend your way to prosperity. You cannot build prosperity by going into debt.”
 
Other forms of the phrase include “You can’t cost-cut your way to prosperity” or “You can’t save your way to prosperity” (cost savings will help a business to survive, but not to grow), “You can’t devalue your way to prosperity” (currency devaluation), and “You can’t tax your way to prosperity” (taxes discourage business activity).
 
“You can’t spend yourself rich and you can’t vote yourself free” is a related saying.
 
   
Google Books   
July 1905, Tom Watson’s Magazine, “Why I Believe in Free Trade” by Winston Churchill, M. P., pg. 64, col. 1:
I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to life himself up by the handle.
 
Google Books
Roosevelt Versus Recovery
By Ralph West Robey
New York, NY: Harper & Bros.
1934
Pg. 79:
Yet there is a basic defect in the argument underlying the public-works-spend-your-way-to-prosperity thesis.
 
Google News Archive
9 April 1934, Berkeley (CA) Daily Gazette, ‘Roosevelt’s Policies Hit as Reed Opens Senate Campaign,” pg. 9, col. 3:
“Deluded by promises of magic cures for ancient ills,” said Reed, “America is being fed poisons from which it will take decades to recover. I do not believe that we can spend our way to prosperity. I am unwilling to see destroyed in four years a civilization which has been centuries in building.”
(David A. Reed, Republican senator from Pennsylvania—ed.)
 
Google News Archive
7 June 1934, Pittsburgh (PA) Press, “New Republican Policy Attacks Roosevelt System,” pg. 18, col. 3:
CHICAGO, June 7—The new “declaration of principles” adopted by the Republican Party in its meeting here yesterday, charged that “in the name of national recovery the present administration has committed the country to a program which, unless checked, will lead to the choas of unlimited inflation.”
(...)
We believe that we cannot spend our way to prosperity.
 
2 November 1934, New York (NY) Times, “Turning Point Seen in the Naval Talks” by Charles A. Selden, pg. 5:
The British think they have the financial end of the question more seriously than the United States does. “You spend your way to prosperity,” said a Briton to one of the American group, “and we are trying to get there by saving.”
 
Google Books
Liberalism Fights On
By Ogden Livingston Mills
New York, NY: Macmillan
1936
Pg. 143:
The dividing line is between those who are convinced you cannot borrow and spend your way to prosperity.
 
11 June 1936, Logansport (IN) Pharos-Tribune, pg. 10, col. 1:
“One time I told a Democratic congress,” he (Herbert Hoover—ed.) said, “that you cannot spend your way to prosperity. You will recall that that advice was not taken then. It has not been taken yet.”
   
16 August 1936, New York (NY) Times, “Roosevelt and Business: The Wide Rift” by Elliott V. Bell, pg. SM5:
Wall Street asserted that you cannot squander your way to prosperity. It argued that relief should be handed thriftily, preferably by a system of direct payments administered through local non-partisan boards. The pouring out of billions of dollars by the government, it said, presented a grave threat of inflation and of heavy taxes to come.
   
13 February 1937, New York (NY) Times, “Landon Sees Court Non-Partisan Issue,” pg. 3:
“You cannot spend your way to prosperity on borrowed money.”
(Senator H. Styles Bridges of New Hampshire—ed.)
 
12 May 1938, New York (NY) Times, “Recovery Plan Offered By House Republicans,” pg. 14:
WASHINGTON, May 11.—In a seventeen-page mimeographed “Minority Report on the Relief and Recovery Program” three minority members of teh House Appropriations Committee put forth today what Representative Bacon of New York, one of the signers, said was essentially a “five-year Republican plan” to “rescue” the country.
(...)
“In the early years of the New Deal, pump-priming was an untried experiment,” said the report. “It had a psychological value in that it aroused hopes that it was a workable scheme. But the country has now lost faith and confidence in ‘spending-your-way-to-prosperity’ scheme.”
 
7 December 1938, New York (NY) Times, “Cleveland Hails Its New Industries,” pg. 43:
Mr. Taft (Robert A. Taft, then senator-elect from Ohio—ed.), speaking on “New Industries, New Prosperity,” used the occasion to advocate seeking prosperity through the encouragement of industrial development rather than by government spending which, he said, created an “unsound prosperity.”
 
“I don’t believe in the theory that you can spend your way to prosperity,” he said. “I think saving is the fundamental basis for going forward in our country.”
 
21 May 1939, New York (NY) Times, “Deficit Spending: Public Debt Seen as Small Cause for Worry,” Letters to the Editor, pg. E9:
TO THE EDITOR OF THE NEW YORK TIMES:
Speaking of the Federal debt, some people say, “You cannot spend your way to prosperity, just as you cannot drink yourself sober.” This sounds convincing. But is it true? You can spend your way to prosperity if you spend with a sound, long-range purpose in mind.
(...)
ERNEST G. DRAPER.
Washington, May 17, 1939.
     
23 June 1939, New York (NY) Times, “Question of Legislation,” pg. 4:
Senator Bridges, Republican, of New Hampshire, remarked that the President “apparently never learns you can’t spend your way to prosperity” and that “it looks to me as though he’s laying the way for announcing the candidacy for a third term.”
   
21 September 1950, New York (NY) Times, “Federal ‘Intrusion’ in Banking Deplored,” pg. 37:
In a discussion of Federa; deficit financing, James E. Shelton, vice president of the American Bankers Association, asserted that it was not possible to “borrow or spend your way to prosperity.” He added that such a road led to bankruptcy for individuals, and that “the same is true of a nation.”
 
Google News Archive
14 February 1961, Palm Beach (FL) Post, “Political Quirks of Fate” by Drew Pearson, pg. 4, col. 6:
Between rounds of golf Ike told friends that Kennedy had better realize you can’t spend your way to prosperity.
 
“If he knows what’s good for us, we’ll pay our way as we go,” he told golfing partners.
   
Google News Archive
3 March 1963, Eugene (OR) Register-Guard, “The Big Question: Will Tax Cut Stimulate the Economy?” by Kelman Morin, pg. 5A, col. 5:
On the first, they say, “You can’t spend your way to prosperity. It didn’t work during the depression and it won’t work now.”
 
18 July 1976, Cumberland (MD) Times, “Ford Expands Lead Over Reagan,” pg. 1, cols. 4-5:
While Ford called for unity in Hatford, Reagan was repeating his attacks on the president’s foreign and domestic policies, telling Utah delegates that Ford had created an illusion of prosperity by deficit spending in an election year. And he charged that Ford had failed to tell Americans the truth about the nation’s military weaknesses.
 
“We’re told that we’re having a solid economic recovery. I don’t believe that. We’ve been given the illusion of prosperity in an election year by printing press money. But what happens then?
 
“You cannot spend your way to prosperity. You cannot build prosperity by going into debt.”
   
Google Books
Conflict and Crisis in Rural America
By Larry W. Waterfield
New York, NY: Praeger
1986
Pg. 12:
Borrowing against the value of land assets kept many farmers going. many farmers were indeed land-rich and money-poor. John Block, the West Point-educated Illinois farmer who became secretary of agriculture under Ronald Reagan, was fond of saying, “You can’t borrow your way to prosperity.”
 
Google News Archive
18 June 1987, Pittsburgh (PA) Press, “Wall Street stays tuned to Cap Cities performance,” pg. C6, col. 1:
Cost cutting helps in such improvement, but you can’t save your way to prosperity.
   
7 September 1988, Miami (FL) Herald, “Renegade Merkle Left in Dust,” pg. 1A:
“The Democrats believe you can tax your way to prosperity, and that’s wrong.”
(U.S. Representative Connie Mack III—ed.)
   
New York (NY) Times
REPUBLICAN DRIVE FAILS TO ADVANCE AROUND COUNTRY
By RICHARD L. BERKE
Published: November 8, 1995
(...)
That means Lieut. Gov. Donald S. Beyer Jr., a Democrat, will break any ties.
(...)
“This was a rejection of the Gingrich revolution,” Mr. Beyer said. “People want change, but they want to be sensible. You can’t cut your way to prosperity. George Allen will have to work with Democrats to pursue mainstream policies.”
       
New York (NY) Times
R.& D. Under the Microscope    
PAUL B. BROWN
Published: December 24, 2005
THE idea that the more you spend on research and development the more breakthroughs result is accepted in boardrooms and executive suites, heralded in Washington - and wrong.
 
That is the conclusion that three Booz Allen Hamilton management consultants have come to after studying the 1,000 publicly held companies around the world that spent the most on R.& D. in 2004.
(...)
“There is no easy way to achieve sustained innovation success—you can’t spend your way to prosperity.”
 
ABC News
Weak dollar doesn’t have to be all pain, no gain
November 8, 2007
(...)
So imports are more expensive, exports are cheaper — doesn’t it all come out in the wash? Not necessarily. “You can’t devalue your way to prosperity,” says Ronald Simpson, managing director of global currency analysis for Action Economics.
 
Forbes.com
Intelligent Investing
Barry Ritholtz’s Monkey Theory
David Serchuk, 03.13.09, 06:00 AM EDT
(...)
Non-stop consumerism taking a backseat to something a little leaner and greener. It will be a different environment. People won’t have the cash or the credit. You can grow or earn you way to prosperity; you can’t borrow your way to prosperity.
 
Cranky Hermit
Sunday, September 06, 2009
You Can’t Tax Your Way To Prosperity
In the midst of the worst economy in decades, with spending down and unemployment up, the Nevada Legislature made it more expensive to buy things and employ people. Not surprisingly, businesses have responded by cutting back even further.