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Obama’s spending spree won’t fix this mess
Spending nearly a trillion dollars in borrowed cash isn’t bold. It’s foolish. And it only adds to a growing national debt that is the real albatross around our neck.
Let me get this straight: With the new stimulus bill signed by President Barack Obama this week, we’re borrowing more money so we can spend more money to generate more spending of money so that we’ll have more money to spend — when this started with spending money we didn’t have in the first place.
Forgive my ignorance, since I’m not a trained economist, but that sounds ridiculous to me. My skepticism is only bolstered by the fact that the Bush Administration’s similarly gigantic stimulus package did nothing to stimulate the economy.
With Obama’s stimulus plan, we’re talking about $787 billion (click here for a breakdown). His plan may be more liberal in where it directs money than Bush’s, but that doesn’t necessarily mean it has a better chance at actually doing anything to stimulate the economy.
There are significant differences between the two stimulus packages. The first was designed to insert cash into the economy through the corporate sector by tossing a bunch of borrowed money at the banks. The second is designed to insert cash into the economy through government by tossing a bunch of borrowed money at federal agencies, states and cities.
Both also gave a little bit of money directly to people through rebates and tax cuts. But only a little.
Certainly, the Obama stimulus plan is huge. It’s definite action, an attempt to do something to fix our sinking economy at a time when many economists and politicians would have us believe we already have one foot hanging over the cliff.
But is it the right kind of action?
A bold move in California
Consider the situation in California, where lawmakers were unable or unwilling, until this morning, to work a compromise that would close a $42 billion budget gap through budget cuts and tax increases. California, unlike the federal government, is legally required to balance its budget, so lawmakers’ three months of inaction led the state to the brink of insolvency. That forced Gov. Arnold Schwarzenegger to take bold action: He announced that he was prepared to lay off 10,000 state workers and cancel a number of public works projects originally deemed uncutable because stopping them would either waste money that has already been spent or would be detrimental to health, safety and welfare.
That was bold. Unfortunate, but bold.
Schwarzenegger shouldn’t have to unilaterally decide where to make cuts to fix California’s budget. It’s a good thing lawmakers in that state finally got their act together, because their willingness to finally OK painful budget cuts and tax increases today should avoid the layoffs Schwarzenegger planned.
But that state’s Legislature only acted when the situation became so dire that it had no other option. Lawmakers didn’t want to make the difficult choices to cut waste, cut valid programs and raise taxes.
Regardless of what they wanted to do, it’s what had to happen. It’s the current reality. Plenty of other states, including New Mexico, are in the process of making similarly painful cuts, and many are also considering tax hikes. They’re taking the right action, as Schwarzenegger was willing to do in California if lawmakers there didn’t act.
But where are the federal cuts? The federal government is bloated with waste. Part of the solution to this economic crisis has to be government cuts. Waste must go. Obama’s plan isn’t bold because it doesn’t address that reality or even recognize it.
Unfortunately, in these times, a tax increase should also be considered. Fewer people have the ability to pay taxes right now, so cutting government programs must come first, but a tax increase might be immediately necessary in some instances to make ends meet and later to help pay down the federal debt.
The real albatross
There are certainly some good provisions in Obama’s stimulus plan. Funding for alternative energy is important. Money that will go to fixing old schools and building new schools helps avert a crisis that was about to strike school districts across the nation. But money doesn’t grow on trees, even though that’s essentially the attitude the administration is displaying with its plan.
The funding will be available for the stimulus plan because we are the most powerful nation in the world and no one is going to stop us from spending money we don’t have. That makes it easy to spend.
But spending nearly a trillion dollars of money that doesn’t really exist isn’t bold. It’s foolish. And it only adds to a growing national debt that is the real albatross around our neck.
Bold would be surgically removing the fat in the federal government and also considering the possibility of raising taxes to pay for the stimulus and balance the federal budget. Few in Washington want to do that, just like lawmakers in California didn’t want to do it there. But it’s necessary. Don’t you have to stop digging before you can begin climbing out of a hole?
Schwarzenegger showed boldness with his willingness to make cuts in the only way he has the authority to unilaterally do. Bush needed to show similar boldness in his last months in office, and he failed. Obama, in his first major effort since becoming president, has also failed to enact the change we need, choosing to instead prop up our unsustainable borrow-and-spend economy. He still has time to act boldly, but until he does, I doubt that any stimulus plan is going to do much to turn this ship around.
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Heath, there’s no substitute for knowledge and getting the facts right. In a case where you don’t have much more than a uneducated “man on the street” opinion, as Tino points out….why take up space on your blog?
The way to handle this would be to have expert commentary discussing pros and cons of various approaches to our present economic circumstances, OR a collection of man on the street opinion that is noted as just that. Or both.
You damage your own reputation when you wander into areas where your opinion is not privileged by knowledgeable background. Ignorance is usually not something to “forgive” in a leader of public opinion.
Carry on with your overall great work!
Two thumbs up on this article!!
We contacted and said no.
“Forgive my ignorance, since I’m not a trained economist, but that sounds ridiculous to me. My skepticism is only bolstered by the fact that the Bush Administration’s similarly gigantic stimulus package did nothing to stimulate the economy.“
That wasn’t a stimulus package, it was a bank bailout and we didn’t see any major bank failures since then.
“With Obama’s stimulus plan, we’re talking about $787 billion (click here for a breakdown). His plan may be more liberal in where it directs money than Bush’s, but that doesn’t necessarily mean it has a better chance at actually doing anything to stimulate the economy.“
Except that this money will get spent. A major point of the bank bailout (not bank stimulus) was to have the money sit in the bank doing nothing, to help them be well capitalized.
“There are significant differences between the two stimulus packages. The first was designed to insert cash into the economy through the corporate sector by tossing a bunch of borrowed money at the banks. The second is designed to insert cash into the economy through government by tossing a bunch of borrowed money at federal agencies, states and cities.“
Wrong again. The purpose of the first was NOT to stimulate the economy, it was to save the banks. Well actually it was to purchase “troubled assets” from the banks in the hope that they would lend more money.. of course they didn’t actually purchase troubled assets.
“But where are the federal cuts? The federal government is bloated with waste. Part of the solution to this economic crisis has to be government cuts. Waste must go. Obama’s plan isn’t bold because it doesn’t address that reality or even recognize it.“
The current recession is seeing a HUGE drop in demand. Nobody wants to spend any money. And your prescription is that the government should spend less money, therefore reducing demand even further? That’s exactly the opposite of what should be done. If you want to cut government spending, the time to do it is when the economy is doing well, not in the midst of a recession.
“Unfortunately, in these times, a tax increase should also be considered. Fewer people have the ability to pay taxes right now, so cutting government programs must come first, but a tax increase might be immediately necessary in some instances to make ends meet and later to help pay down the federal debt.“
Wow, someone took a page right from Herbert Hoover’s book! Again, raising taxes in the midst of a recession is a terrible idea and will make the recession worse. If you want to raise taxes, the time to do it is when the economy is roaring.
Please take a class or two in economics.
Heath – there is something missing in all of the numbers – 42 Billion out of what size budget… 700 Billion plus 787 Billion plus talk of another 1.3 Trillio
n out of HOW BIG IS THE Federal budget?
Adam stated that Congress “didn’t ask for public input.” Silly self-centered sefl-satisfied citizens. How many of you contacted any of your U.s congressmen while this bill was being written, debated and voted upon? I did. Repeatedly,and I received answers – directly related to my specific comments. If you want to be represented, then get into the action and contact your elected Congressmen!
In Roswell this morning, Congressman Teague told us that a web site is being set up at the address http://recovery.gov where anyone can track the money-how much goes to which states, to which agencies within each state, to which contractors from each agency. The formation of this web site is part of the stimulus package.
Harry was pleased to announce that he got an amendment to the bill passed to also have a link on the web page to the jobs being created by the contracts, so people can know where to apply for work.
Fred…. Although these are tough decisions Congress didn’t really ask for public input. It was rushed through congress. I’m curious to actually know how much Obama has read from the Stimulus Bill.
Mark my words… Another bill will be in the pipeline within the next two years. The next time it will be a check sent to tax payers… just in time for election.
While Fred is correct…the economic realities of poor policies and decisions will affect (and already have!) the poor, elderly, disenfranchised more than anyone else, the truth that Heath brings out cannot be denied.
Please do not be delusional in your thinking…there may be some type of “economic recovery” from this stimulus program, but if so, it will only be temporary. This will only make the coming economic fallout even more disastrous for the reasons mentioned in Heath’s blog. Then the economic woes for the poor will be far greater.
Good job Heath! This is nothing more than a mammoth waste of money, directed at special interests behind Obama’s win. This is a serious matter.
Why should we forgive your ignorance?
Go take an intro to macroeconomics class. This is pretty basic stuff.
I realize you will not publish my comments;whether they are seen in print or not, you must be held accountable. Go work in a food pantry, or servie the homeless in a food kitchen, or see the contribultions that ANY church gives to the poor. They know that there is real and ongoing suffering of people. Then dig deeper,and find the many, many elderly poor, who go hungry each month, or eat dog or cat food to feed their growling stomachs.
Find the disabled and in elderly who have to decide which medicines to do without because there is not enough money to pay for housing, utilitiles and medicines, before they even look at purchasing food.
You need to peer into actual faces of the poor and needy before you write such diatribe again.
i used to be middle class; a decades-old injury forced me from my career into diasbility and poverty. I saw others decline, through the changing federal programs that favored the rich at the expensne of the working peoples.
You have not seen nor experienced enough suffering to write these unfounded criticisms. so, your “intellectual exercise” falls short, because it does not meet the standard of reality -the harsh reaity of the cruel world of today.
Go find those realities first; then I will be most pleased to be enlightened with your words.
It is so very easy to criticize, when you are not the one to make the tough decisions. In case you have NOT noticed, programs for the poor, the elderly, the disabled, have dwindled to next-to-nothing in the past decade adn more, so that homelesssness for these is already a reaity. YOur “boldness” would include further suffering for the unfortunates. So many families are only one paycheck away from homelessness,and yet, with the hundreds of thousands of job cuts, you are in favor of this? How cruel can you be?
There is almost no middle class anymore; this stimulus allows tax cuts so the middle class,upon which the health of every country depends, gets a much needed tax break.
Almost every day, the Obama administration is communicating some new program, or some new approach to get our nation, including the federal government into a working, useful tool for all its citizens. President Obama has pledged to look into every department of the fed to seekout waste, but this takes time. Time to be complete, thorough ,and fair. Your column suggests that you are not interested in completeness, thoroughness or fairness. Your “bold” assessment has not allowed him this time. Your bias is showing.
Our infrastructure is crumbling; have you noticed the billions this stimulus has placed for improving infrastructure? Every time you drive on a highway that needs repair or replacement; every time you cross a bridge that is more than 50 years old, don’t you ever think that these need replacing, to be safe?
Before you write even one more word, actually READ the stimulus bill; find the relief for each and every state whose budgets need assistance. These are for essential government services.
Yes, there is waste. Give this administration time,and the wastefulness will be uncovered and eliminated. don’t you trust anyone in this administration? Or do you want to revert to the former administration, which brought about this unnecessary economic downfall?
There are pools of ignorance in almost every sentence in your comment. Would you rather this administration have done nothing at all? As has the previous administration? This article is seriously out of touch with reality. talk to a homeless family before you posit such froth.
Your opinions need to include time for this new administration to work through on its promises. How can you possibly criticize with such huge strokes an entire administration that has only been in power less than one month? Yes, Inauguration day was January 20,and today is February 19th. To totally clean house in a huge number of agencies in the largest democracy in the world, you dont’ even allow one whole month?
Where was this outrage in the last eight years? Deregulations in so many areas have made our food supply unsafe. I have salmonella, from some yet-unknown source. I am fearful of buying any foods now – how can I be certain that anything is safe to eat? This is the result of unbridled “degegulation.’Our food supply had been safer 8, 10, 20, 30 years ago. What happened to make so many foods unsafe now? YOu know the answer – ever more deregulations.
Even in my weakened state, I am still totally appalled at your premature criticisms. what, are you bigoted? Are you jealous, that all the white presidents could or would not do what this half-colored person would do? Rather, think of his education and his committments, his HONESTY and hard work ethic. Hold off on your short-sighted barbs. Allow him to provide relief for the poorest of the poor in this country, to relieve the humiliations that abject poverty produces, through no fault of our own. we cannot all be Warren Buffets, or Bill Gateses. WE do not want to be Enron or Wall Street Execs, or any of the Ponzi-schemers. We simply want a fair opportunity to make our own way in this world, which has been taken from us. These are extra-ordinary times. It takes real intelligence, real courage to accomplish good in this presently evil world,and you wish to criticize instead to work to better our world?
You’re on the money Heath.
Can obese food addicts loose weight by glutinous eating?
Years ago when businesses got in trouble there was an expression “cut the fat”.
So where is the fat? It is us the local, state and federal govt.
Spending other people’s money is not only a habit, but has become an institutionalized addiction.
We have become a nation of thieves that has no conception of responsibility and self-worth and demand that irresponsibility be catered to by those not wallowing in self-pity.
No matter how flowery the rhetoric or promises there has never been any good come from taking from some and after skimming off the cream distributing what’s left.
As the debt pressure becomes unbearable the back-door Robin Hood approach at solving fiscal problems will only lead to more and bolder forms of larceny.
The fact is – thieves, no matter their form could care less about anyone else and those who want to survive might start thinking about how to stop feeding the monster.
welcome back to journalism heath!