What Would a Real Stimulus Package Look Like?

The first half of this year saw a frenzy of enthusiasm and excitement. The government was doing something unprecedented: It was giving us some of our money back. The idea was that we would get the check, cash it, spend it on stuff, and in so doing we would stimulate the economy. Many Americans got their checks, cashed them and filled their gas tanks, bought food and other necessities, or they paid down debt. The stimulation received by the economy was minimal at best, hardly worth the cost—you can see that very plainly today—and yet, with that little piece of history and all of its attendant lessons still so shiny and new, what are we hearing from the Congress and the Federal Reserve? You guessed it: Let's float another $150 billion stimulus package!

According to Congressman Barney Frank (D-MA), chair of the House Financial Services Committee and one the key architects of the current economic crisis, “the new package would help states pay for stalled infrastructure projects, and also provide assistance to struggling Americans in the form of extended unemployment benefits and money for food stamps and health care costs.”

Frank's boss, House Speaker Nancy Pelosi (D-CA), someone else with their fingerprints all over our current financial woes, said said that lawmakers need to take a close look at the federal budget for possible savings and they need reconsider whether the U.S. can afford to fight what she calls “a war without end” in Iraq. “We have some very harsh decisions to make,” she said, “and some of them can't wait until January.”

Aside from the fact that these ideas were rejected from the first stimulus package, you have to appreciate the democrats' desire to ease the pain, and while that is all well and good, why not stop the bleeding that is causing the pain?

Two Simple Questions

OK, call me cynic, but I have two questions:

  1. If it didn't work the first time, why would it work now?

  2. If returning tax money to the people is a great way to stimulate the economy, why aren't these same people advocating huge tax cuts so the economy can be stimulated faster?

As for the first question, one of the definitions of insanity is the idea that you can expect something that failed before to suddenly work by doing the exact same thing. That might work when you are learning something, like how to hit a baseball, but it takes a lot of repetition. When you are talking economic strategy, on the other hand, if something you tried did not work before, it is unlikely to work now, so unlikely that spending billions of dollars on the gamble makes no sense.

The possibility of insanity aside, the other answer to Question One is that those proposing this second round of stimulus payments are either completely blind to history or they don't care that it didn't work before, they simply want to appease the masses. For the Romans it was bread and circuses, for today's democrats and go-along-to-get-along neocons, it's dribs and drabs of our own money.

Regarding the second question, this reveals the big lie of the liberal agenda in this country. They tell you that private citizens having money to spend invigorates the economy, which is true. The more consumers spend, the more the economy grows. Yet, they also want to take your money away from you in the form of high taxes so that they can decide how your income is spent. In other words, they admit that consumer spending is good and yet they insist on the right to spend it for you, throwing a little your way when it suits their needs.

Why?

Because it places them in control of how our money is spent while making it look like they are giving us something; a present, so to speak, and that is what they want to do so that it appears that they are feeling our pain and they want to help us. This way, they have something to campaign on when it is reelection time. It is like gun control. It is something that patently does not work, does nothing to curb violence, but it is a cheap and easy way for politicians to claim that they are doing something about crime. It is a cynical, short-sighted manipulation and nothing more.

The Bottom Line

What these stimulus plans do not do is address the root causes for the pain. They are politically-driven band-aids and nothing more, politicians playing with other people's money to buy votes and nothing more.

Healing the economy will take more than government handing money back to the people. It requires that government not take that money in the first place. It means doing what it takes to stimulate both domestic business and overseas investment in American companies. That means low taxes and reasonable regulations that keeps people on the straight and narrow without making their companies uncompetitive. It means recognizing that the tax code was not meant to be a political goody-box for rewarding campaign contributors and political allies, that the progressive tax system is a failure, and that the whole thing needs to be simplified. It means real energy independence with high levels of domestic oil and natural gas production and nuclear energy fueling a return to the heavy industry that made this country great.

I know, I can almost hear the shrill keening of some of you about “the rich” and how they must pay “their fair share.” These people already support nearly half of the US government, and that is on top of creating jobs by starting and building companies, investing in businesses and, yes, buying things. In terms of sheer numbers, they are the most productive members of society and they should not be punished for their success, if for no other reason than that doing so would have a nasty trickle down (where have I heard that expression before) effect throughout the economy: Less investment, fewer start-ups equal higher unemployment, which, in turn, leads to more government spending on social programs, which leads to higher taxes to pay for said social programs. It is a vicious cycle of despair that would not be necessary if the people and organizations that take risks and create jobs were allowed to do it freely.

There is a choice coming up, a choice between a candidate that might prove to be business' best friend and lead us out of this economic morass that years of liberal policy and neoconservative (read: left-leaning Republican) stupidity have led us into; and a candidate who's stated intentions will sink us even deeper than we are now by offering the same liberal mindset that got us here in the first place.

Makes you wonder, which one is really offering us change.