Wednesday, December 17, 2008

Trillion Dollar Baby

Well, if anything is going to stay the course under the Obama Administration, it looks like it will be fiscal recklessness:

Anxious to jolt the economy back to life, President-elect Barack Obama appears to be zeroing in on a stimulus package of about $850 billion, dwarfing last spring's tax rebates and rivaling drastic government actions to fight the Great Depression.

Obama has not settled on a grand total, but after consulting with outside economists of all political stripes, his advisers have begun telling Congress the stimulus should be bigger than the $600 billion initially envisioned, congressional officials said Wednesday.

Obama is promoting a recovery plan that would feature spending on roads and other infrastructure projects, energy-efficient government buildings, new and renovated schools and environmentally friendly technologies.

There would also be some form of tax relief, according to the Obama team, which is well aware of the political difficulty of pushing such a large package through Congress, even in a time of recession. Any tax cuts would be aimed at middle- and lower-income taxpayers, and aides have said there would be no tax increases for wealthy Americans.

So the Obama fiscal team is going to make the same mistake we made before in borrowing billions of dollars to try and use tax rebates to make people feel better about the economy. Except this time, Obama wants to further "enhance" the project through the creation of public works projects and other unnecessary expenditures. All in all, the plan could top $1 Trillion of new public debt.

A lot of this fiscal silliness is encouraged through the lack of a requirement that the federal budget be balanced. Despite many tries in the past by Congressional Republicans to adopt a Balanced Budget Amendment, we are still stuck in a legal position that allows this stuff to happen. And while a balanced budget requirement would clearly not resolve all instances of fiscal stupidity, it might make Federal leaders think twice about massive borrowing programs that further and further hurt our fiscal posture. Certainly, it might make them think twice (or, in some instances, for the first time) about engaging in borrowing huge sums of money the government can't pay back in order to make the citizenry feel better about an economic calamity caused by people and business borrowing huge sums of money they couldn't pay back.

The most distressing news about this proposal are the publics works programs that Obama wants to introduce in order to try and shock the economy back to life through job creation. The problem is that this works proposal smells an awful like the so called "New New Deal" that Obama wants to create in order to expand the role and size of government, expand the federal budget, and generally but in where federal help is not needed or necessary. Compounding the ideological arguments against such Keynesian silliness and such a brazen expansion of federal responsibilities is the inconvenient truth to those on the left that the original New Deal solved nothing, with the Depression truly ending only with the start of World War II and the general economic aftermath of being the last man standing. The other point that gets skipped a lot, of course, is the fact that it is generally accepted that FDR and his New Deal prolonged the Depression by nearly a decade, with Roosevelt's policies driving people further and further into the economic abyss. These kind of fiscal shenanigans are not of the sort that we need to be emulating, neither now or ever again in the future.

If the President-Elect really is serious about helping American taxpayers and helping the American economy, he should immediately freeze non-National Security related spending and immediately implement policies to cut unnecessary government programs immediately. Free up that capital, pay down the national debt, and give a real and meaningful tax cut to the American people. The tax holiday proposed by Congressman Louie Gohmert is a good start. Doing the typically liberal thing of throwing more government dollars away in an inefficient matter helps nobody....

(Crossposted)

2 comments:

Daniel said...

I see one very big glaring hole in BO's approach.

Most of the job creation workers (if there be any) this is intended for will not be there.

The better question should be - just who is being laid off right now? What are their skill sets? Are they manual labor or highly trained with degrees? Address that.

By not matching, this BO approach is doomed to failure. Just like before.

wind river said...

Its entitlement time in the WH and Congress. What did we expect from a community organizer who organized people who believed they were entitled to something from someone else?

All you people out there who did not buy more house than you could afford, who are responsible with your spending, who are not too far in debt...............SCREW YOU SUCKERS!

I needed an emergency loan a few years back to replace a water line to my house. The cost was $5800. I did not have it. I was using 380 gallons a day in water because of the massive leak. I went to the state and they found a fund that could help in this exact situation. I did not qualify. Why you ask? Because I DID NOT HAVE ENOUGH DEBT. If I applied with only $1000 more debt, I would have received the loan. I was penalized because I was responsible. If I would have bought a $1200 home theater I did not need, I would have been eligible for the loan.
The moral of this story is if you want any help from the government, you must not be a responsible citizen.

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