Obama's Plan Goes Beyond a Reasonable Stimulus

The consensus couldn't be clearer: the US economy needs help, and it needs it fast. As the market wallows in uncertainty, shakers in New York and Washington alike are preaching the need for fast action to stimulate the markets.

Barack Obama, who has been quick to aide the troubling economy, promises to pass something by February 16th. Myriad problems have arisen however, as his administration and Senate Republicans have begun discussing what exactly that something should be. The Obama administration, together with the Democratic congressional leadership team, has assembled a massive spending bill designed to jolt the economy back to health. This $800-$900 billion plan is unprecedented in size and scope, amidst an economic slump many Democrats argue is equally unprecedented in severity.

Many Republicans, however, say the bill goes far beyond reasonable spending, and they seem to be right. As the matter goes to debate on the Senate floor today, Republican leader Mitch McConnell is urging his fellow lawmakers to seek a "Timely, Temporary, and Targeted" measure. And while the Obama plan is certainly timely, its measures go far beyond a responsible stimulus.

Surprisingly, the two parties don't seem to be butting heads on providing aide to those with low income. In fact, both sides are advocating relief. In a press conference this morning, McConnell reasoned for "tax relief for middle and low income taxpayers." The Obama Administration could not agree more. "Nobody is trying to keep a package from passing, we're trying to reformulate it" said the the Republican Leader. While the sides agree on the necessity of speedy relief to those most in need, the republicans are right to call for the pork to bleed out of this bill.

Unfortunately, many measures in the current plan will do little to invigorate the economy, but will needlessly accelerate spending in a time of record debt. A proposal to spend $2.25 billion on national parks, currently in the Democrat's bill, will not help the economy. Measures proposed by House Speaker Nancy Pelosi, and outlined in an interview with ABC, to route money to family planning services, were wildly out of line. $2 Billion for child care subsidies, while potentially helpful to the economy over time, will certainly not lead to the short term spark the economy needs.

Instead of becoming the spending bill to end all spending bills, the proposed stimulus needs to address the specific and immediate needs of the economy. It must:

1. Provide tax relief to those with middle, and low incomes, to restore consumer spending and confidence.
2. Outline specific measures to relieve financial institutions of their troubled assets.
3. Provide direct support to the commercial paper markets.
4. Backstop foundering industries with direct support. Student loans and healthcare are among those who should recieve help.
5. Allow for specific tax breaks for businesses, especially those which encourage them to reduce their debt.

In a time when partisan bitterness could easily flare up on either side, the debate thus far has been surprisingly civil. As the matter moves into debate today, Democrats should remember that the President has emphasized the need for bipartisan support for the bill.

Republicans, for their part, should keep all of their procedural options open, to ensure the final stimulus package is one which does what everyone wants it to do: delivers relief to consumers, strengthens businesses, and shores up the overall economy. If not, the stimulus could end up being the economy's death by 1,000 checks.

Comments

[kelm:]

Yes. When you dissect the plan there is very little that is actually stimulus and leaves the nation with something tangible after the money is spent. The litmus test should be does each dollar improve our infrastructure in a manner that boosts our competitiveness or safety, does it lead to new products, new patents, or new technology that we can market to the rest of the world, or does it in some manner make this nation tangibly more competitive. If we focus on those goals we will create jobs. If instead we focus on palliatives for the voters we will only create short term benefits at best. Unfortunately, neither party seems to be taking this approach.

One other point to consider: there is a strong possibility that the massive spending planned (between bank rescues and stimulus) lead to a currency crisis in America. Should that happen we will want every dollar we have spent to create something tangible. i.e. "ok, the currency collapsed but we created technologies that are in high demand in the world and are 20 years ahead of what anyone else has". That would make it worthwhile at least for the next generation.

Feb 03 09:56 AM

[rrbatch:]

Good points raised for improvements to the "stimulus" package. I'd add one more caveat: that whatever is funded be clearly temporary. My spreadsheet derived from an early draft of the House bill contains over 150 line items under 13 Titles, many of which are simply expansions of the bureaucracy or entitlements. How can we believe that these ares will be cut back when recovery takes hold?

Feb 03 11:14 AM

[jack kreg:]

rrbatch, absolutely, every bit of this bill should have sunset provisions, the money is one time, the money will not be spent again next year, the program is to do something, get it done because there is no more free money after this 100 year flood of gov spending.

Feb 03 11:59 AM

[stevendedalus:]

Since it's tax time, why not simply encourage e-filing to rush the refunds and IRS to add 50% to the check; those who owe should be able to deduct 30% of obligation, or the IRS to mail back a 30% rebate.

Feb 03 01:39 PM

[OldLimey:]

I am not remotely anti-American. Sure, I loathed Bush and have serious reservations about Obama (or, more accurately, his team) - but I have a great deal of time from your fine country and her people. Against that background I have to say I am utterly agog (I know - not a precise technical term of art). The spending packages that seem to be gestating, the way it is being done, and the level of debate surrounding issues which - sorry to sound so dramatic here - will affect the nature of the Republic for generations are just truly frightening. Yes, I'm sorry to say that a crisis of confidence in the USD is well possible - maybe not immediately, but sooner rather than later.

Feb 03 02:32 PM

[henarl:]

Politicians will be politicians. Any spending bill passed by Congress will always pander to voters and campaign contributors. Comprimises will be trade-offs between satisfying one congressman's constituents and another's. Staying in office will always be priority one, Such is the elected representative system. Unfortunately, no better system has yet been discovered.

Feb 03 03:16 PM

[antiquary:]

Simply easing the situation directly on the people and businesses won't do it, because our culture of fear has everyone frozen like a deer in the headlights, financially speaking. Government spending is about the only spending that'll take place, so a lot of it needs to happen until the headlines head back the other direction and everyone relaxes a bit. And this way, the public will actually have benefit for the money, like better bridges and national parks.

Feb 04 11:25 AM