The largely Democratic U.S. Senate (along with 3 (barely) Republicans Olympia Snowe & Susan Collins of Maine & Arlen Specter of Pennsylvania) thumbed their nose at a majority of Americans and voted 67 – 31 to foist debt upon generations of Americans by passing the Economic Stimulus bill.
Before we jump into the specifics of this legislation, let’s answer the question about whether a government sponsored economic stimulus package is a good idea philosophically. In other words, is the government dumping money into the economy a good idea to begin with, specific spending items not withstanding?
I take the line that it’s a bad idea, almost irrespective of what items actually make it into the bill.
- The government doesn’t have any money. How does a government get money? Largely, even primarily, by a public tax. For a government to spend hundreds of billions of dollars for this enormous chunk of legislation, it will have to some how come up with the money. What are the options? Raise taxes, print more money, or borrow the money. Raising taxes doesn’t stimulate the economy, it takes from those who SHOULD be stimulating the economy (you & I). Simply printing more money begins an inflationary spiral that makes the money we do have worth less, solving nothing. If we borrow the money, we have to pay it back. Why will our children be better able to pay for the messes we’ve made than we are?
- Jobs & Work are not the same thing. We kept hearing our President talk about the “shovel ready” infrastructure projects this bill would fund, and those projects would help us out of this mess. I don’t think they would. George Stephanopolous got a blank look when Michael Steele shared this line of thinking, but I think most of you are smarter than George. What happens when the shovel ready projects are finished? All those people who are employed on them… are unemployed again. Unfortunately, then, because government artificially propped up the job sector, there has been no “stimulus” for the private sector to create jobs and people are once again unemployed. Now the government must either continue to employ them or figure out another way to get people work… er, jobs. People get wistful & misty eyed talking about FDR’s brilliance and how he led us out of the depression with his lettered programs (CCC, TVA, BFD… I made that last one up). I contend that WWII led us out of the depression because it provided the opportunity for THE PRIVATE sector to be re-energized. Now there was reason for people take risk and create jobs. Don’t believe me? What happened to all the people who had those government jobs after WWII? Why don’t we have them today? Because people got private sector jobs, which were sustainable.
- Inertia. What is at rest tends to stay at rest until acted upon by an outside force. In this case, the government is trying to be the outside force acting upon an inert economy. The goal, I assume, is to someday get to the place where the economy will be able to sustain itself without government help. If that’s the case, this is bad legislation. All form of business & personal taxes will go up to pay for this legislation. That means less money in your pocket and mine. Broad sections of the population with less money to spend won’t get an economy going in the long run (even the Congressional Business Office agrees). Now, if your frame of reference is, say, an 8 year period, this might allow you to dump the mess into the next guy’s lap (my sense is that this mess we’re in right now is the result of poor fiscal policy mounting up since Bush the elder) and escape as a President who started to right the ship (see FDR). For the long term, however, it does very little positive, and I think most likely does very much damage.
The key to long-term, successful, fiscal policies rock-solid, proven PRINCIPLES that you simply don’t violate, even if it seems like things are going down the tubes. I believe we’re in this mess because George W. Bush (and to a lesser degree, his father), not to mention Bill Clinton, abandoned the fiscal principles that helped America recover from the Carter years. Determining to live by the principle of limited government should dictate the action in this case:
- Begin by cutting government waste and spending, not legislating it in the largest pork barrel spending in history. (See Sen. Tom Coburn’s (R-OK) list of stimulating items). A slimmer government allows you to…
- Cut taxes, especially business taxes & capital gains taxes. This is often derided as the conservative pancea. Don’t deride it until you try it. Cutting taxes gives the private sector incentive to put money into the economy. The private sector will spend it better, and get a better return on it than the government will. That is sustainable economic growth. Where George Bush takes a bad rap (rightly so) is that he cut taxes, then went on a spending spree. Of course that’s a recipe for disaster. Call it a tragedy, just don’t call it a failure of conservative principles.