Do We Need Yet Another Stimulus Package?

by: NuWire Investor October 22, 2008    

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by Eric Ames

In an effort to stem the financial crisis, Federal Reserve Chairman Ben Bernanke is encouraging Congress to pass another stimulus package when they meet next month. To date, President Bush has said he feels as if passing another stimulus bill would be premature, considering we haven’t given the current stimulus measures time to be fully integrated into the economy, but Democrats hope that Bernanke’s blessing will be enough to change his mind.

There are several proposals for a new stimulus package on the table right now, but Democrats would like to see this one include funds to address infrastructure and aid states, according to the Associated Press.

If a new stimulus package is passed, it will probably end up being as much as--or even more--than the previous $168 billion stimulus package passed back in February. In addition to the infrastructure and state aid, there could be another tax rebate included, according to the AP.

It makes total sense, too, because if we are going to take bad debts off the books for these financial institutions, then why shouldn’t the government give taxpayers money to pay off their debts? Our nation’s infrastructure is badly deteriorating in many areas, so there is a definite need for something to be done; the infrastructure proposal is a good one, assuming that the projects selected are carefully reviewed. In addition to completing badly needed repairs or upgrades, infrastructure work would also create jobs.

But at what point are we going to say enough is enough? How many bailouts or stimulus packages do we have to pass before the economy is going to turn around? Will the economy even react to any of this?

These are all tough questions, ones for which the government doesn’t have answers. At this point, they are determined to do whatever it takes to fix the economy and are content to use a trial and error methodology. I don’t know about you, but I would prefer that the government be a little more conservative with my tax dollars than they have been.

We have already committed around a trillion dollars in financial stimulus aid and so far nothing has worked; at some point we need to cut our losses. I think part of the problem is that since it is an election year, everyone is trying hard not to lose their jobs.

Instead of thinking, "What is best over the long term?" they are thinking, "What is going to get results over the next two months?" This is obviously not the mindset we want our leaders to have. I sure hope Bush stands up to this push for another stimulus package and instead lets the next administration evaluate its merits. Hopefully by then our leaders will be thinking straight and have our true interests at heart.

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This article has 1 comment:

  •  
    Oct 22 04:09 PM
    Couldn't agree with you more that a focus is needed on longer-term solutions, while short-term stimulus might help psychologically, in for no other reason.

    The real questions are how do we re-structure The Mess so that we move away from the tragic economic direction we have moved toward for the past 28 years.

    Not to bore you or your readers, but to consider how to now adjust our national spending and investment decisions the following observations are offered:

    What got us here?

    Flash back to the neo-con's answer to 1970's stagflation and Milton Friedman's Shock Economics Theory he plied so well in South America for right wing fascists.

    Roll tape a bit forward to the Gipper. Cut taxes, spend on defense out the wazoo, run record deficits, de-regulate markets and watch Uncle Milties' magic work.

    While every right wing neo-con tape loop is buzzing with out-of-control GSEs, we all seem to conveniently ignore how all of this silly and frightening theoretical economic approach played out around the world through the likes of the IMF, World Bank, Halliburton, and their ilk.

    Look at any country where this supply-side, trickle down, deregulated gambit has played and look at how eeiry is the similarity between those countries and this one:

    1. The top 1% control 40% of all financial wealth in the U.S. The top 20% another 52%, leaving the rest of us (80%) America's financial wealth at a whopping 8%.

    2. In terms of inherited wealth only 1.6% inherit moe than $100,000. 91.9% receive nothing. Yet the "death tax" is the highest priority on the ultra-conservative agenda.

    Now for some sobering reminders:

    Under Clinton we enjoyed a $287 Billion SURPLUS that's now an ever-growing DEFICIT that at last peek was nearing $700 Billion and national debt that has grown from $5.7 Trillion to $10.2 Trillion in just seven years.

    It wasn't because Clinton was an economic genious. He simply returned out-of-control revenue reduction (tax cuts) back to the Reagan rates and chose folks who shared his philosophy of government and its role. I'll put my money in the hands of the guys that believe that it's the government's job to invest in the 80% of us that need practical ways to grow our own wealth (smart energy policy, infrastructure development, education).

    We are truly in new economic waters where the full weight of our national wealth needs to be invested in long-overdue infrastructure investments, new directions in energy policy and worker training.

    Short-term stimulus, yes. Long-term national investment, yes!!!
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