GREAT DEPRESSION

The news regarding the proposed stimulus plan is depressing.  The president has said: 

” failure to act on an economic recovery package could plunge the nation into a long-lasting recession… if we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe.  Millions of Americans will lose their jobs, their homes, and their health care.  Millions more will have to put their dreams on hold.. [it would be] inexcusable and irresponsible to delay this economic recovery legislation..  The bill before Congress isn’t perfect, but it is absolutely necessary…”

So let me see if I got this right, The federal government is choosing to spend my children’s money on pork to solve a perceived problem.  The money has to be spent now!  We don’t have time to debate the fundamentals of what the money is to be spent on or how it will be spent or look at long term effects.  We are told a select group of government hired economist have shown, using models allegedly adapted to our current situation, that we are headed for a great depression if we don’t act and act big.     

Does anyone besides me see the massive problems with this string of underlying assumptions?  Lets look at the first assumption in this chain.  They have assumed that they are the only ones capable of solving this problem.  The current package is the equivalent of giving just shy of $3000 to everyone in the country.  Why not do that?  At this point I would rather give$3000 to some not paying taxes in stead having a group of politicians come up with a nonpartisan spending package.  A package that includes giving $1B to CDBG,which would directly flow to ACORN.  Or give $4B to Rezko like slum lords for renovations.  After the President’s failed experience in Chicago, I am surprised to see stuff like this in this stimulus package.  I don’t understand why no one has a problem with this unfocused redistribution of wealth.  Just give us our money back!  So what if we pay off credit cards with it, half of us will become more comfortable buying that new car or HDTV.  The other half will actually pump it back into the economy.  It looks to me like the President wants to use this crisis to pump money back to all those that helped him get elected.

The second assumption is that we don’t have time to debate the fundamentals.  I hear Obama stomp his feet and imply that because he won the election he has an referendum to do as he pleases when he pleases.  I guess this includes picking and choosing who he listens to.  Have you noticed that the actual group of “sky is falling” economist are never named.  The model they are using is never mentioned nor the assumptions for their predictions.  I had a great visiting professor in a Sloan course named Dr. Ralph Katz .  He said and I have always found it to be true, “If there is one thing you know absolutely for sure, its that a prediction or estimate will be wrong.  How wrong is a function of the knowledge and competence of the estimator.”  Well I have a great deal of uncertainty given that it appears to me that the administration has failed show “transparency” here.  It also does not help that the bailout funds, yeah remember those, have been absurdly mismanaged.  The government doesn’t know what nearly half that money is being used for.  It also does not help that the congressional budgeting office (CBO) has said that a such an unfocused stimulus (spending)  package will actually hurt the economy .  Why are we in such a rush.  I feel like someone is trying to sell me a $800B+ used car.  What’s an extra two weeks to sort things out?  Any bells going off out there?

The third and perhaps most important assumption and error with President Obama’s rhetoric regarding the stimulus package is that he thinks “…a stimulus bill, is a spending bill.  What do you think a stimulus is?”  What an ignorant statement!  You don’t stimulate the economy by moving money around, which is essentially what this bill does.  Stimulus implies that by spending, or better yet investing, a higher economic output is achieved.  I know of no example of this but imagine that government money could be used as a catalyst to foster private investment and thus inspiring higher economic output.

We are having a horrible bill RAMMED down our throats by a bunch of political rookies.  If you don’t know what is in this stimulus plan then you are not fulfilling your patriotic duty to stay educated.  In the first three weeks all I have seen from the administration is disarray.  They call press briefings and are late, they nominate tax cheats and lobbyist for cabinet positions and recant campaign promises of transparency.  Well America you asked for change, now you got it.  Open wide and get ready to eat whatever Nancy Pelosi, Harry Reid, and the administration are serving.  Oh yea, and keep a journal so you can explain to your children why they must endure the same experience.  Wouldn’t this be considered taxation without representation… that’s another post.  The only way I can stay sane is to think that if enough people get up off their mental couches and look at this, we can assist our rookie politicians.  Or are there just that many stupid, brainwashed, lazy, or subsidized people out there.