When we found out the U.S. economy lost about the same number of jobs in January, Obama chided Republican congressmen for not passing stimulus legislation faster. Now, with little fanfare the Obama administration has downgraded their estimate of the stimulus bill’s ability to generate jobs. In fact, it moved form 4 million jobs down to 3.5 million jobs. Of course, the people in January who lost their job are real, not fictional estimates about a ill-planned and rushed bill. They have families, needs and concerns. Futhermore, many Americans have worries about what the future holds.
Republicans chided Obama and House Democrats for not thinking about the opportunity cost of this bill. In other words, if we spend $1, what opportunities do we give up in the future. Put one more way, by spending $1 on ‘the arts’, we give up $1 toward aiding the credit markets or $1 for preventing a home from foreclosing, or from giving up $1 by cutting the taxes of businesses or individuals.
The federal deficit could balloon up to as much as 14% of GDP that is huge. Many economists and politicians (as well as myself) agreed that budget deficits and the national debt should not be a huge concern, especially considering the amazing reputation of government-issued debt from the Treasury (how we finance the debt). If we have a suitable means to finance the debt and the money we are spending seems to be necessary, then we should do it without a concern for debts and deficits. That equation changes when the yearly deficit is predicted to be 14% of GDP. That means the government is spending more than it is taking to the point of being 14% of our entire economy. The world’s largest mind you. That is a dangerous precedent and we have to think about coming back from that.
In 2004 and after, politicians and military advisers warned not to go on a military junket with out an exit plan. Do we have an exit plan for the stimulus bill and the crisis? It does not appear so. The new Treasury Secretary gave us a new proposal that was nearly as vague as Henry Paulson’s. That makes me believe we have just authorized Congress and the President to throw the kitchen sink at the list of solutions to fix the economy. If the Treasury Secretary, hand-picked to deal with this crisis, doesn’t have a specific solution, why are we authorizing Congress to pass a hodge podge bill with different pet projects and Keynesian rhetoric?
We should really think about this crisis…and given a $1 trillion dollars (less than spending a million dollars everyday since Christ’s birth), we should be able to fix this. Throw a $1 trillion against the wall, maybe it’ll stick, but it won’t solve the crisis. Target a $1 trillion solution at the root(s) of the problem and I suspect we’ll get something done.
Recent Comments