Economic Stimulus Package

It’s been a rare occasion during this administration when the president and congress agreed on anything. Presently the president and congress have decided that the nation needs an “Economic stimulus package,” which is supposed to head off the recession that they think we’re headed for, due mainly to the housing mortgage “crisis” and the resulting jitters on Wall Street.  Steve Chapman perhaps said it best, “Washington, D.C. is a place where delusions go to thrive. That explains why Congress and the president are now agreed on remedies that will not work, expending money they do not have, to fix a problem that may not exist.”

It’s an election year so they want to look like they’re doing something. Presidential candidates are all saying the same thing—“we’re in a deep recession and only I can guide the economy back to health.” A recession is defined by negative economic growth through two successive quarters, so we’re not in a recession. Economic growth is still positive and unemployment is still low. The economy goes up and down—always has—always will. A downturn from time to time is expected. There’s really no sane reason for the government to meddle with it. But meddling in things is what governments do.

Congress and the president have decided to throw money at the alleged problem by sending cash to selected classes of the American public. They think that the recipients will immediately blow the money and the resulting infusion of cash into the economy will fend off a recession. What Bush wants right now is a bill providing rebate checks to 117 million families and $50 billion in incentives for businesses to invest in new plants and equipment.

 I’m no economist, nor are the politicians claiming they know the way. Even if they were it wouldn’t matter. I agree with George Bernard Shaw who said, “If all economists were laid end to end, they would not reach a conclusion.” So let me say right off that I don’t think this plan will work because it doesn’t involve enough money for a start and it isn’t going into the right place to do anything more than raise retail sales figures until the money is all spent. It won’t calm nerves on Wall Street or entice businesses to invest their money. Simply stated, this is not an economic stimulus package but rather an election year gimmick that will cost no less than $150 billion.

 This plan can be construed as beneficial to the people, provided the construer is also a recipient of the government’s largesse. I don’t know whether or not I’ll be on the receiving end of this scheme. While it won’t do a thing toward fixing a recession, real or imagined, it will please those who get it. The Democrats want to extend the tax rebate to those who don’t pay any income tax and extend unemployment benefits as well. If they get their way, it becomes a welfare giveaway rather than an economic stimulus. Senate democrats have indicated that since this is a bill the president is anxious to sign, they have the opportunity to load it up with lots and lots of their pork barrel projects, or hold up the project altogether as has been their custom since 2001. But since the public already knows that they are going to get some “free” money, the bill will probably glide through congress like their annual pay increases.

 So the upshot of all this is that some of us will be getting a check from the government that we are encouraged to spend. We need not trouble ourselves about whether or not it will stave off a recession, because it won’t. The money won’t be coming before May or June at the earliest. The stock market is gyrating now so for the measure to help, the stimulus needs to happen now. This economic mini-panic could well be over by the time the checks are sent. But in the meantime, every politician in congress will be able to take credit for putting money in most peoples’ pocket, which is clearly more important (to them) than the boring old economy.