I am utterly confused by the philosophy that is being pushed right now that the answer to our country’s economic problems is to spend more money. Spending money is what led us here in the first place. Our national debt has doubled over the past 8 years under President Bush, and now, the Hope-of-Our-Nation (as it would seem), Barack Obama, is pushing very hard for Congress to have a new Economic Stimulus Package ready for him to sign ASAP after he takes office.
And everyone seems to be completely on board with it!
Why are we buying so blindly into what this man says? I am not arguing his credentials, nor am I saying that he shouldn’t have been elected; given our other choices back in November, at the very least he couldn’t be any worse than his primary opponent, and I am inclined to believe that he will do more good than harm while in office. But what I am arguing is his belief, and the way it is being touted as the ONLY possible solution, that lowering taxes and instituting more spending programs is the answer to the current economic situation. Remember, President Bush, according to many of Obama’s supporters, got us into this mess single-handedly, by instituting massive spending programs, as well as providing huge tax credits to everyone in the country. Remember also, that ’spending program’ means borrowing. We don’t have the money to pay for Obama’s projects – and they are good, sound projects – so what isn’t being reported is the fact that in order to fund them, our nation will borrow even more money, through bonds and loans.
I am not opposed to President-elect Obama’s proposal. I am not going to argue with having my taxes lowered, or receiving an extra refund (which is actually the same thing, even though politicians would stop at nothing to have you believe otherwise), and I understand the need and benefit of investing in infrastructure, which is a huge part of Obama’s plan; this will eventually benefit us down the road. What I am opposed to is the media-fed and politician-fed frenzy claiming that this is the only thing that will turn around our economy and put us back on the right track.
Because it isn’t, and it won’t.
The last time Congress handed out tax rebate checks, it did nothing to jump start the economy. Investing in infrastructure by creating jobs in areas such as alternative energies, schools, roads, and green building is all well and good, but it will take at least a year to get most of these proposed projects approved, given the excessive bureaucracy of government and municipalities.
And my biggest concern, as much as I hate to say it, is that you are not going to do anything but deepen the federal deficit by lowering taxes and spending more money, because again, we don’t have money to spend. And if we aren’t getting it through taxes (which are being lowered) we will get it through borrowing. It has been predicted that the national debt could double again in 4 years. Although it is taboo to mention this, there is the possibility that we have to pay back a portion of this money at some point. Eventually, taxes will need to be raised in order for this to happen. The way our government is operating, we are just prolonging the fantasy, and delaying the inevitable.
ESPN columnist and Brookings Institute Fellow Gregg Easterbrook recently wrote in his Tuesday Morning Quarterback column regarding the issue of government’s hypocritical spending habits. He titled that section of his column: “If Teenagers Borrowed to Spend the Way Washington Borrows to Spend, Adults Would Call Them Irresponsible.” But when Washington does it, it is considered normal. To be more precise, when George Bush does it, it is called evil, and when Barack Obama does it, it is hailed as revolutionary and messianic.
Spending money they didn’t have is why people defaulted on their mortgages; mortgages that were foolishly given to people who couldn’t afford them, and then bundled and sold to investors who didn’t understand them, and then foolishly peddled away as though they were part of a bazaar. Many people should have known better – home-buyers, lenders, and realtors alike.
Unfortunately, no one seems to know better, and now we are heading down a similar path with different scenery. The only consolation is that this will all get better anyways, of its own accord – the economy always does. One of the main reasons things seem as bad as they do, is simply because the media and politicians are TELLING you things are as bad as they are (more on that another time). When things turn around, it will have very little to do with actions taken or not taken by any politician. It should be clear by now that human interaction usually can only harm the economy, not help it.
Image by: Cavell L. Blood, SXC
Dan Mason is an accountant by trade only – he would much rather write. He constantly daydreams about being in the woods or on the water, in the middle of nowhere. He resides in the Rochester, NY, area and is thankful the Adirondacks are only a few hours’ drive away. He is happiest when there is a pen (read: keyboard) or a canoe paddle in his hand.
3 thoughts on “[COMMENTARY] Why Are We Spending to Fix Our Spending Problem?”
My two cents off the top of my head:
1.) Let me preface this with the fact that I couldn’t stand Bush and am a big fan of Bill Clinton; however, Bush inherited this mess. It had been percolating sine the mess began by Bill Clinton lifting financial regs at the request of than CEO of Goldman Sachs Henry Paulson.
2.) Spending to fix spending? Incurring debt to get out of debt? Sounds counterintuitive and I agree with your questioning of whether this is really what we need. However, part of me thinks it is, and that’s because, in the end, we are built on market. And market is sustained on absolutely nothing but public trust and enthusiasm. It has much less to do with spending and debt than any of us would like to think. It’s marketing. It’s buzz. It’s wierd, but it’s what upholds all that we hold dear… so we’ll see if this spending expiriment works or not… The fact is that it’s not meant to kickstart fiscal responsibility (although I’m hoping that might happen), it’s meant to kickstart public trust in the market that is the US.
I agree that market is built mostly upon marketing and buzz, and emotion (that’s actually part of a follow-up to this commentary that wil appear next week in TFL). And even though that is the strength of a free market, it also can end up being its downfall as well. The market, strong as it may be, can only sustain frenzied buying for so long. And as was noted, spending is what drives our economy. But somewhere there has to be accountability and responsibility, or else the bubble will burst, so-to-say. I’m not sure what the answer is, but my fear is just that if spending isn’t reigned in soon, we might stretch the market beyond its ability to recover.
You are right about the new economic stimulus package being a really bad idea, but I think you are missing the point.
The stimulus boondogle won’t fix the economy, it isn’t even supposed to. Our new president and his associates don’t
care about the economy; it was the media hyperventilating about the economic woes of the the past several months
that got them elected.
The real point of the tax cuts/credits for us poor folks – anyone who earns less than $250000 per year apparently- the
massive make-work infrastructure projects,and the government armtwisting of the banks, is simply intended to extend
and consolidate the power of the federal government.
Governments, however installed; by elections, by revolutions, or by the divine right of kings, all do the same thing.
They govern. Get out your dictionary and look it up. The first definition in mine says this – “To control the actions or
If you truly believe, as I do, that the USA is supposed to be a free nation of free men, this economic stimulus nonsense ought to scare the crap out of you. It might not turn the economy around but that doesn’t mean it might not accomplish
exactly what it’s really supposed to do.