What is there NOT to love about the new American Bailout? Lots actually.
Apparently, the Senate is close to some sort of deal on the stimulus, and may vote on the bill as early as Monday (although it’s a weekend, and lots can happen in DC). And as for the bill,
it appears the package, as initially brought to the Senate floor, will be scaled back by about $82 billion in spending reductions and $25 billion in tax cuts. In addition, tax cuts approved on the Senate floor this week for car and home purchases would be modified, and the total bill then would be in the range of $800 billion [emph added].
Actually, with debt added in to it, the bill is well over a trillion dollars, right? So far, no one (except the administration and the Congressional and Senate Democrats) seems really excited about this bill, which includes crafty economic stimulators like research for STDs ($400,000,000), digital TV coupons ($65,000,000), and a facelift for the Department of Commerce building (a rounding error of $34,000,000). There’s a great deal of criticism towards this bill, with negativity pouring in from all comers.
Personally, if the government feels it has to do something to address the economy, I wish it would buy me a brand new, alpine white Dodge Challenger. But before I tell you why, let’s examine the current plan, first.
Amity Schlaes compared President Obama’s current economic recovery plan to the failed Japanese Government stimulus plan of the 1990s, where
[t}he spending yielded painfully little for the rest of the economy. The Nikkei stayed down. The country’s standard of living failed to keep pace with the rest of the world’s. The average Japanese’s purchasing power had been moving closer to that of the average American, Ronald Utt of the Heritage Foundation has noted. But in the 1990s the Japanese saw few advances. The gap between America and Japan widened again. “The construction state is in some respects akin to the military-industrial complex in cold-war America (or the Soviet Union), sucking in the country’s wealth, consuming it inefficiently, growing like a cancer and bequeathing both fiscal crisis and environmental devastation,” commented Gavan McCormack, a professor at the Australian National University. The stimulus plans had the opposite effect of what was expected [emph added].
The nonpartisan Congressional Budget Office was critical of the bill as well, saying
the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary [emph added].
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of
government, we the undersigned do not believe that more government spending is a way to improve economic performance.
More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in
the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over
experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should
focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the
burden of government are the best ways of using fiscal policy to boost growth
I’ve avoided politicians so far, since readers may be suspect of any judgements rendered by them on a pending bill. But the Vice President proffered his assessment on the President’s stimulus plan: ” “If we do everything right, if we do it with absolute certainty, there’s still a 30% chance we’re going to get it wrong”[emph added]. Senator Diane Feinstein also expressed displeasure with the bill, doubting its purported ability to rapidly create jobs.
Gambling a trillion plus on 7 to 10 odds is a fair bet, especially when it is other people’s money. . .
Sure there are people who like the stimulus. People who think the government should do more, even if it means placing an increased tax burden on the AMerican people, are enamored of it. But what about you out there, are you excited about this bill?
I am not. Put away your surprise face and I will tell you why.
The sunk costs of the two stimulus packages passed last year, coupled with this one pending, are roughly the equivalent of writing a $13,000.00 check to every American family. Even Keynesians have to be cringing at the haphazard way the Congress and Senate bills hemorrhage cash into the economy, with no rhyme or reason, and no defined timeline, no clear endstate, and with some programs that, while not stimulating the economy, will permanently increase the scale and scope of government, adding a burden to American taxpayers.
The costs and risks of this bill far outweigh the benefits, especially when, as the CBO puts it, doing nothing has a better effect in the long run.
But governments almost always do something, lest they be accused of doing nothing, since doing nothing is inherently bad when on the taxpayers’ dole.
So how about just give us the 13K, and let us stimulate the economy?
Americans are profligate spenders, and no one is likely to bury this cash in their back yards. Writers here at the Acre of Independence (ok, me!) would head out to Ourisman Dodge in Alexandria and put $12,990.00 down on a brand new Alpine White Dodge Challenger R/T coupe, with a 5.7 liter V8 engine. That would immediately put thousands into the local economy, generate at least $2,000 in sales tax for Fairfax County, VA, and, $200 a year in property taxes, too. The R/T’s V8 would triple my current monthly gas purchase (and triple the amount of Diet Coke Big Gulps I buy at the local 7-11 where I fill up). The interest I paid on the part of the R/T I financed would be an additional cash outlay for at least five years, again generating revenue for the beleaguered banking industry. And hey, I am buying a Dodge, a product made by the failing American automobile industry, so I would be doing my part and helping a company that is already on the government payroll thanks to Bailout Part Two!
And as the country sits on the eve of this bill’s passage, an Alpine White Dodge Challenger seems the appropriate vehicle to drive into the future.
The 1971 cult film Vanishing Point portrayed a working class everyman, known only in the film as Kowalski, who lost everything in life that he cared about. Once a soldier, a police officer, and champion stock car racer, he makes a living now delivering cars for Argo’s Car Delivery Service in Denver Colorado. The company orders him to deliver an Alpine White Dodge Challenger R/T to San Francisco, and he bets his drug dealer friend, who sells him speed (hey, it was the early 70’s!) double or nothing (for the cost of the speed) that he can make it to San Francisco in less than 24 hours. The rest of the film is an extended chase scene, as Kowalsky burns the Challenger across a bleak, depressed American landscape. At the end of the film police block the road with bulldozers, expecting Kowalsky to surrender; he guns the gas and crashes into them, the Challenger explodes, and the film ends.
If the government passes some sort of stimulus, and turns us all into Kowalsky, and all of America into the Vanishing Point set, the least they can do is throw the Challenger in the package, too, so we can check out the scenery. Fast.
Post Script: The last $10.oo of my personal government stimulus (after all, I only detailed where the first $12,990 would go)? I would download the new Britney Spears Album, Circus, on iTunes.