Last week, the Senate basically passed the stimulus package the was crafted by the White House and the House of Representatives. Interestingly, nothing brings our two parties together like giving away free money in an election year.
I find myself agreeing with Mike Huckabee's take on this. He was the only candidate running for president, with the possible exception of Ron Paul (I can't remember), that came out against the stimulus package. He stated in the debate before the Florida Primary;
"One of the concerns that I have is that we'll probably end up borrowing this $150 billion dollars from the Chinese. And when we get those rebate checks, most people will go out and buy stuff that's been imported from China. I have to wonder who's economy is going to be stimulated the most by the package."
He went on to argue that the money would be better spent by adding 2 lanes to I-95 from Maine to Florida, which would have a better impact on the economy. [On a totally separate note, he noted that 1/3 of the total US population lives within 100 miles of I-95, which I did not know.]
If you think about it, it makes sense. Government should spend money in an economic downturn and what better way than infrastructure projects such as roads, bridges, etc. It's when the economy is good that government should spend less. It's clear that both parties forget that part. I don't think this generation of Republicans will be able to run as the party of fiscal prudence after the last 6 years of their running Congress. The Democrats are no better, albeit they are more transparent in their earmarks. I won't get started on earmarks. That will be a separate blog.
Looking back at infrastructure projects versus giving people money and hoping they will spend it. It just seems clear to me that Huckabee was right. Which has the greater impact. By doing infrastructure projects, we take care of legitimate needs that need to be done by the government. Some of the water systems and sewer systems in this country are over 100 years old. Roads are inadequate in many (most) metropolitan cities. Bridges are old need to be inspected and replaced. On top of that, it would create jobs. Construction workers who are out of work because of a housing downturn, go build roads. Seem obvious.
On the other hand, giving out money accomplishes exactly what Huckabee says it will. People will go by crap made in China. You really don't have much choice. Most everything is made overseas, a lot of it from China. I actually heard some government official saying that there was a fear that people would get the money from the stimulus package and pay down debt and save it instead of spend it. Good lord, how awful!! There is something fundamentally wrong with our economy when the government is worried that we will save our money or try to pay off debt. Isn't that why China is buying up our debt to begin with because we don't save?
Maybe I am missing something obvious, but I think a little common sense goes a long way and there is a dearth of that in both parties.
4 comments:
There's nothing politicians hate worse than a recession in an election year. Why, the average congressional incumbent's chances of re-election go from 99.9% to 99.8% !! Horrors !!
gotta love Huckabee [sometimes]. Ron Paul is going to get Love from Yours Truly in a blog pretty soon if I can get it out. You sure the Schmidts shouldnt have been doing grunt work for him???? [vbg]
My God, Matt. Those are my thoughts exactly! I was speaking to my Gramps about how practical Huckabee can seem when it comes to financial matters. Too bad the Repubs don't seem to want him in there.
Interesting comments. Your exasperation about the election year cash giveaway is a little simplistic though. Last election they organized a drop in the price of gas right before the election and everyone felt good about themselves (more cash in the pocket). This year, there is no chance that is going to happen - what with Chavez out there threatening to cut of the spigot. So, no problem, we borrow the money and give it straight to ourselves! My opinion, ok sure. Atleast no one discussing how the defense tab is increasingly off the books entirely....
As to a construction project - in theory I agree with you (and FDR). The problem is that it would take like 20 years to do such a project. Need I mention the Inter-County Connector?
Ahhh....just give me the money and I will use it for a downpayment on my beach house!
Wayne
Our trillion dollar plus surplus got spent this way when Bush came to office. It's the people's money don't you know. It served the same purpose. The Tech bubble had burst, then the post 9-11 downturn and thank God they gave us money to spend. What is so sad here is that the ONLY way to get our economy moving is for us to SPEND money rather than produce things. I have a huge fear of a consumption based economy. How long can that sort of economy be sustained? As is obvious, it is subject to the vagaries of the pocketbook. No home equity loans, no economy. that seems like an unstable system to me.
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