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Thursday, January 29, 2009

Stimulating Debate

Steve left this comment on my recent post about the inclusion of additional funding for contraception in an early version of the stimulus package (this funding did not make it into the version passed by the House this week):

As to the "contraceptive stimulant", yes, I think it is ridiculous, but also exemplary; an example of the type of thing Rush Limbaugh (I gather, even though I don't descend to listen to) loves to latch onto in order to discredit an entire program of an other-wise positive and sincere effort to get us out of this mess...
First, let me say thanks for the thoughtful comment.

Next, let me say I also believe, like you, that most of the effort is thoroughly sincere. And, of course, you are absolutely right that this provision was exactly the sort of thing that Rush will seize upon and tirelessly flaunt in an effort to diminish the entire enterprise. It's not just Rush though. There is an entire industry that has grown around his model, one which no doubt pays handsomely. However, the fact that Rush, and those of his mold, rail against the stimulus bill (or anything else for that matter) doesn't automatically mean that it must be on the whole a positive. In this case, those on the Left use Rush et al. as little more than straw-men, presented for the purpose of knocking them down just to give credence to their argument.

The facts of the matter as I see them are thus:

Our government, in an effort to eliminate the current economic slump, is going to spend a massive amount of money. About 2/3 of it in the form of direct spending and about 1/3 of it in the form of tax cuts. No one knows if this will work or not. One can find respected professional economists, each with their own mountain of data to both prove this works and to prove that it doesn't. Therefore, it is not at all clear that the present undertaking is, in fact, the right thing to do.

In the seventy years or so that Keynes and his theory on government spending has been around he has been lauded for showing us the way out of the Great Depression and vilified for not being able to defeat the combined high inflation and high unemployment of the 1970's. No doubt that some will look upon the current experiment in spending as the final test for Keynes. A tie-breaking economic title fight for undisputed economic theory champion of the world. I suspect that a system as chaotic and complex as the world's economy can never be subject to the dictum of a single idea and all that we will know once this is over is whether or not this particular response, undertaken in its own peculiar way was successful or not. Of course, it won't be surprising if future economists are able to reasonably argue both sides, not unlike the current discussion of FDR's response to the Great Depression.

There is little doubt that some portions of the stimulus bill are not at all what could be considered emergency economic spending to jump start the economy. Many of the spending provisions were previous goals of the Democratic congress which they have inserted into the stimulus bill. The Democrats won. They are the majority. There is absolutely nothing wrong with them putting forth their proposals and even using the legislative rules process to favor their ideas over those of the Republicans, but this should be done under the normal legislative appropriations process, not as part of an emergency response to our dire situation.

If the Republicans had won there is no doubt that the stimulus bill put forth would have been the mirror image of the current one. In this case, tax cuts, not spending, would have made up the majority of the bill. In which case, a blogger or media personality from the Left would comb through the bill find some tax cut that directly benefits a tiny group of wealthy individuals and then tirelessly flaunt this as proof of the fact that Republicans do not care about average Americans. Even Rush has counterparts on the Left.

To those on the Right that would argue the apparent failure of the TARP program proves government spending will not alleviate our current woes I would offer the following cautionary note: The failure of the TARP does not prove that government spending cannot lift us out of this crisis. It does prove, however, that giving $350 billion to a handful of banks cannot lift us out this crisis.

What then, are we to do? It is clear that with one party in control of Congress and the White House it is their vision of response that will govern. All we can do is wait and see.

2 comments:

Steve said...

Politically, you have pretty well hit the nail on the head. I do think, however, that since this is such a new phenomenon (considering the banks impotency, the Wall Street gimmickries,and the apparent inability to regulate these)it is going to take more than tax relief and mortgage relief to fix the problem.
If anything, I see Obama's stimulate plan as not going far enough. I'm not talking about any give-away plans to the un-needy or spending trillions on public works,
but more along the line of major changes in the financial markets themselves; i.e., nationalization of the banks. If this sounds radical, it may not seem so in the near future

Steve said...

Jerry, just want to say again thanks for the informative and insightful blogs. They give us old codgers something to think about and to perhaps jog our gray matter. Also, it is great to read a writer who knows how to think and write at the same time - not a common quality.