Democrats are using the stimulus bill to go on a wild spending spree that otherwise would have been hard to sustain, even with large Congressional majorities. Funding proposals that ordinarily would take months to review were just waved through in the House of Representatives and now are in the Senate, where the President wants prompt action. It would be hard to spend nearly a trillion dollars without some of it doing good, but that should not be the standard of good fiscal stewardship.
The country's and world's problems are the result of a credit bubble, in turn the product of banking speculation and government demands for granting high risk mortgages. Therefore, you'd think that the biggest topic in Washington right now would be the creation of a "bad bank" to absorb the bad loans and free up the credit market.
You'd think that the second hottest topic would be a stimulus bill that would induce investors to put their capital at risk to create new enterprises and, therefore, new jobs. There may be several trillion private dollars sitting on the sidelines waiting for the right time to get back into the market and invest. Right now, the federal government is undermining investors' confidence, not building it up.
The stimulus bill has many well-informed opponents and it is not popular with the public. Let's be clear, the Bush/Congressional compromise stimulus bill last fall also was largely misguided, especially the short-term "refunds" (including unearned refunds). Those checks dropped into the economy like rocks thrown in a pond; there were no ripples and nothing changed after they dropped. All that resulted was an increase in the federal deficit. So there is lots of blame to go around. But the refund checks having failed, now we face a far larger variation of the same mistake.
Some programs are worthy and will have real results in the economy, but the best examples of that are in the rather modest transportation programs. Others--I've heard 80 percent--won't even be felt for a year and a half or more. Much is just political teen agers joy-riding for Big Government, the Democrats ("I won.") having fun doing favors for such political constituencies as teachers unions and other government employees. Government workers may be worried, but they have suffered least so far.
The economic thinking for the new programs being "stimulated" is vapid. Why are we proposing in this economy to provide help with college loans to families whose bread-earners are still employed? When the need to revive the job machine, why the big effort to lower the cost of living for those already employed?
Of course, the people already employed are also the class of people who are going to pay for all the hoopla, the ordinary, hard-pressed taxpayers. The highest cost will be a debauched currency.
Even the specific recipients of the stimulus handouts should be skeptical. The help for college tuition, for example, is not really going to help parents much. It is going to help college and university administrations that are having a hard time meeting their budgets (as who isn't?) and who, once the bill is law, will promptly raise tuition to meet the availability of the new funding capacity of parents.
It is hard not to be entirely cynical about this bill. But let us acknowledge also a sincere impulse to take care of people through government. In a future blog I will address the motive force of a lot of big spending schemes; namely, the liberal desire to have the government take over the seemingly over-whelming problem of providing care for all the dependents in our population. With an aging baby boom, a big population of indigents (the homeless numbers grew even in boom times), the large numbers of physically handicapped, the mentally ill, the growing prison population, not to mention the children, how can all these people be cared for? The free market isn't up to it. Surely getting money out to people who are unable to care for themselves will help spur the economy, right?
But how is government going to be up to it, either, when the government is supported by the free market? How does Mr. Obama solve anything by redistributing the wealth when there is less and less wealth to redistribute? Before he gives it away, he might try to figure out how wealth is created in the first place.
