Sunday, February 01, 2009

The Depressing Stimulus

As though the ongoing economic news were not depressing enough, Americans observing the House of Representatives this past week sadly learned once again what most already thought to be true: even when facing genuinely grim circumstances, those that we have elected to Congress lack the ability to be serious.

Thus, the supposed stimulus package has been filled with expenditures that do relatively little in the short term (the short term emergency being the rationale for quick action on the bill) to stimulate the economy -- based on any liberal or conservative theory -- and that do a great deal to pay off interest groups that helped to elect Democrats and to implement vast new far reaching federal program changes on the fly that should be the subjects of intense national discussion.

All of this is being done in an environment in which, and part of this results from the mentality of both Congress and the Bush administration, no one seems to care what anything costs. That is perhaps excusable with regard to genuine short term stimulus spending. It is not excusable with regard to the creation of vast new entitlements. In fact, it may push the country toward a choice between runaway inflation and financial insolvency.

All Republicans in the House and those 11 Democrats, including Tennessee Rep. Jim Cooper, who voted against the bill deserve credit for standing on principle.

It remains to be seen whether the Senate will correct some of the most egregious excesses of the House bill -- or worsen them. If they are not corrected, when the dust settles from all of this, we may find that we have created a national crisis that will be far worse than the one we are seeking to escape.

In addition, it is not at all clear that even a correctly done stimulus package will have the desired effect. Job creation requires investment, and investment depends on stability. Yet, we will not have stability as long as the Obama administration and Congress keep uncertain the future of a huge portion of the American economy. If you have money to invest, do you put it in health care? Transportation? Energy? Housing? Financials? Those industries all face looming uncertainty, as no one knows what major policy changes will be effectuated under the current administration. Certainly, a great deal is being talked about, and there are aspects of those talks that would appear threatening for businesses in any of those industries. If I had cash to invest, I would stay put for now, and it is likely that many of those who do are thinking the same thing.


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