An economy is a living, breathing entity. When times are good, it can grow and flourish like a lush rainforest. However, when times are bad, that same forest can shrivel up into a barren desert. Just like in medicine, there is no panacea to fix an ill economy. The government can try all it wants, but only time will tell if things will get better.
Barack Obama will try his hand at healing our current economy, but no one is foolish enough to think that the Democratic stimulus package will make everything better overnight.
Pumping government money into an economy deepened and lengthened the Great Depression in the U.S. and created the “Lost Decade” of the 1990s in Japan. When I write government money, I mean money that the government takes from the private sector and uses as it sees fit.
What does this Keynesian “pump-priming” package include? Money for the Florida yacht industry, for subway riders in New York City and for uniform manufacturers elsewhere. What should it include? Elimination of the tax on money American businesses earn overseas so that much of the $545 billion kept there would be brought back immediately and injected into the economy without any increase in the national deficit, according to The Wall Street Journal. Seems like a no-brainer to me.
The Wall Street Journal reported the Congressional Budget Office and Joint Committee on Taxation have estimated that only $170 billion of the stimulus will be spent in 2009.
Instead, it would be wise to look at alternatives. The Reagan tax cuts are widely revered as being successful and the short-term benefits of the George W. Bush tax cuts are no different. I say stick with what works. For example, cutting the payroll tax in half would result in a very noticeable and immediate impact. That result would be more money in the hands of both employees and employers.
Hopefully, Obama’s economic team made the right decision and by year’s end we’ll all see the difference. If the stimulus package isn’t just for the economy, then what else does it do? For starters, it puts $87 billion into Medicaid. This will bail out states that make impossible health-care promises and burn through money like there’s no tomorrow.
A new program will allow some laid-off workers who are collecting unemployment checks to enroll in Medicaid. Another $30.3 billion will be thrown at Cobra Insurance to decrease the cost from 102 percent to 65 percent for the unemployed. It would appear the government no longer believes in providing incentives for workers. They’re much happier using this stimulus package to provide disincentives. How quaint. As Ronald Reagan said, “The greatest social program is a job.” I couldn’t agree more.
It also appears that a large piece of this stimulus package is going to be used to bolster an already far too large welfare program. If the government isn’t careful, it will spend its way into an era where no one wants to work because the government will take care of them. But wait, they aren’t stopping there. Take a look at some of the other necessary programs in this stimulus package that The Wall Street Journal pointed out:
• $1 billion for Amtrak
• $2 billion for child-care subsidies
• $50 million for the National Endowment for the Arts
• $400 million for global warming research
• $2.4 billion for carbon-capture demonstration projects.
• $650 million for digital TV conversion coupons.
Now, the stimulus package isn’t all bad; there is a good $20 billion for business tax cuts. So, roughly 12 cents for every dollar of the stimulus package can actually be called an economic stimulus.
Considering this is a huge amount of money the government is spending to stimulate, we can all hope that it works. But, as you can see, there is much more to this package than just the economy. It looks like Congress is taking advantage of the stimulus package to take care of its own interests and maybe help some old friends along the way.
I, for one, hope Obama and his so-called stimulus package succeed and our current recession is fixed. If not, I can always say I told you so.
Ryan Rougeau is a junior majoring in computer engineering. He can be contacted at [email protected].