One of my heroes had this to say:
"If everybody is thinking alike, then somebody isn't thinking."
Right now, everybody seems to be thinking that we need a massive stimulus package. At this time, both parties are in favor of a stimulus package. The difference of opinion in Congress seems to be about the size or the programs which will actually be part of the stimulus package.
However, the Congressional Budget Office has just issued a report that may call into question the wisdom of pursuing this type of stimulus plan.
In their report they have forecasted that over next ten years, the plan, as it stands now, will generate 815.8 billion dollars in budget deficits. That's almost a trillion dollars. And thats if the package does not get increased.
And how often is it that a government program ever is brought in on time and under budget?
In addition to the budget deficit problem, there is also the issue that the demands of the stimulus package. According to the CBO, it will exceed the limits laid down by federal law.
What does this all mean? It means that everything is going to get expensive. Not that its going to cost more for things, its just that any other program that the government wants to pay for (say like fighting terrorism, reforming health care, etc.) there will be less money to pay for all that. It could also mean that the cure proposed by both parties is going to cause problems worse than they are now.
Now, it should be noted, that in the 1990s, Japan went through a significant and prolonged recession. The Japanese response to the recession was to engage in a massive public works project. In all, the Japanese government undertook nearly 5.5 trillion dollars worth of public debt to pay for this stimulus package. The result: no meaningful recovery. Now, there is the argument that the infrastructure spending which was the center of the stimulus package (as it is to an extent with the Obama Administration's proposals) were not targeted in the right way. However, it should give someone pause before the government whips out its credit card and essentially maxes it out.
The only thing is, other than some of the House Republicans (from my perspective, I almost think they are doing it to be oppositional to President Obama and Democrats rather than being constructive about things), most everyone else in D.C. is convinced that the only way to solve this problem is through some form of the current stimulus package. Perhaps we need to stop and look around at the options.
Of course, given the way this country has been run for the last decade, that has not been a strong suit (i.e. USA PATRIOT ACT I and II, TARP). Already, we are learning that because the government decided to just throw money at the banks when the housing market started to go south, the program essentially wasted money by over-paying for bank stocks.
Once we start down a road this massive, there is almost no way to stop. The road that is proposed could lead to things that we as American do not necessarily want. There is a place for government spending in this mess, but it is not clear that the plan that is being put forward right now is the right one.
Then there is the specter of how all this debt will affect how the United States is able to operate. Essentially, the note on this country will be held by foreign investors. It is unclear what the effect all this debt would have. Some say that it should be minimal, but that it does expose the U.S. to potential liabilities and problems. If one were to accumulate a significant portion of this debt, say like a country that does not share out ideals of democracy, human rights, and individual freedoms, this could lead to a situation where we might have to choose between our ideals and our debt.
Unfortunately, no one seems to want to talk about these issues. No one wants to be seen as being Hoover. Everyone wants to be FDR. The one thing that should be remembered is this: the New Deal did not end The Great Depression in the United States.
The Great Depression in the United States ended in 1941 - 1942. That would be when the U.S. was building up in anticipation of the war, and after it entered the Second World War.
Perhaps someone should consider that before voting on the stimulus package.
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