Diary of a Mad Voter: Heath Haussamen
Obama’s Spending Spree Won’t Fix This Mess
Spending nearly a trillion dollars in borrowed cash isn’t bold. It’s foolish. And it only adds to a growing national debt that is the real albatross around our neck.By Heath Haussamen, 2-19-09
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Let me get this straight: With the new stimulus bill signed by President Barack Obama this week, we’re borrowing more money so we can spend more money to generate more spending of money so that we’ll have more money to spend—when this started with spending money we didn’t have in the first place.
Forgive my ignorance, since I’m not a trained economist, but that sounds ridiculous to me. My skepticism is only bolstered by the fact that the Bush Administration’s similarly gigantic stimulus package did nothing to stimulate the economy.
With Obama’s stimulus plan, we’re talking about $787 billion (click here for a breakdown). His plan may be more liberal in where it directs money than Bush’s, but that doesn’t necessarily mean it has a better chance at actually doing anything to stimulate the economy.
There are significant differences between the two stimulus packages. The first was designed to insert cash into the economy through the corporate sector by tossing a bunch of borrowed money at the banks. The second is designed to insert cash into the economy through government by tossing a bunch of borrowed money at federal agencies, states and cities.
Both also gave a little bit of money directly to people through rebates and tax cuts. But only a little.
Certainly, the Obama stimulus plan is huge. It’s definite action, an attempt to do something to fix our sinking economy at a time when many economists and politicians would have us believe we already have one foot hanging over the cliff.
But is it the right kind of action?
A bold move in California
Consider the situation in California, where lawmakers were unable or unwilling, until this morning, to work a compromise that would close a $42 billion budget gap through budget cuts and tax increases. California, unlike the federal government, is legally required to balance its budget, so lawmakers’ three months of inaction led the state to the brink of insolvency. That forced Gov. Arnold Schwarzenegger to take bold action: He announced that he was prepared to lay off 10,000 state workers and cancel a number of public works projects originally deemed uncutable because stopping them would either waste money that has already been spent or would be detrimental to health, safety and welfare.
That was bold. Unfortunate, but bold.
Schwarzenegger shouldn’t have to unilaterally decide where to make cuts to fix California’s budget. It’s a good thing lawmakers in that state finally got their act together, because their willingness to finally OK painful budget cuts and tax increases today should avoid the layoffs Schwarzenegger planned.
But that state’s Legislature only acted when the situation became so dire that it had no other option. Lawmakers didn’t want to make the difficult choices to cut waste, cut valid programs and raise taxes.
Regardless of what they wanted to do, it’s what had to happen. It’s the current reality. Plenty of other states, including New Mexico, are in the process of making similarly painful cuts, and many are also considering tax hikes. They’re taking the right action, as Schwarzenegger was willing to do in California if lawmakers there didn’t act.
But where are the federal cuts? The federal government is bloated with waste. Part of the solution to this economic crisis has to be government cuts. Waste must go. Obama’s plan isn’t bold because it doesn’t address that reality or even recognize it.
Unfortunately, in these times, a tax increase should also be considered. Fewer people have the ability to pay taxes right now, so cutting government programs must come first, but a tax increase might be immediately necessary in some instances to make ends meet and later to help pay down the federal debt.
The real albatross
There are certainly some good provisions in Obama’s stimulus plan. Funding for alternative energy is important. Money that will go to fixing old schools and building new schools helps avert a crisis that was about to strike school districts across the nation. But money doesn’t grow on trees, even though that’s essentially the attitude the administration is displaying with its plan.
The funding will be available for the stimulus plan because we are the most powerful nation in the world and no one is going to stop us from spending money we don’t have. That makes it easy to spend.
But spending nearly a trillion dollars of money that doesn’t really exist isn’t bold. It’s foolish. And it only adds to a growing national debt that is the real albatross around our neck.
Bold would be surgically removing the fat in the federal government and also considering the possibility of raising taxes to pay for the stimulus and balance the federal budget. Few in Washington want to do that, just like lawmakers in California didn’t want to do it there. But it’s necessary. Don’t you have to stop digging before you can begin climbing out of a hole?
Schwarzenegger showed boldness with his willingness to make cuts in the only way he has the authority to unilaterally do. Bush needed to show similar boldness in his last months in office, and he failed. Obama, in his first major effort since becoming president, has also failed to enact the change we need, choosing to instead prop up our unsustainable borrow-and-spend economy. He still has time to act boldly, but until he does, I doubt that any stimulus plan is going to do much to turn this ship around.
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Comments
The little nugget for Joe Sixpack, the several dollars a week less withholding and a few more dollars in his check left immediately in fuel price rises at the time crude prices continue to fall or stay in the doldrums. YOu do have to wonder if that was planned. No matter, those dollars go to BigOil. Directly. Not to the local hardware store for a repair or maintenance. Or to the grocer. The Paki or Palestinian gas station dude takes it first and he just passes it along to oil distributer who won't tell him what his next load of gas costs until the truck arrives, and you had better have the cash to pay the driver. Some stimulus. The Paki or Palestinian smiles, fill your tank, and goes back into the convenience store, which feeds his extended family, clothes them, and provides them a warm place in winter and cool in summer. A lot better deal than home was.
The problem was toxic mortgages, and those mortgages bundled into asset packages and sold, and resold, and partitioned and sold again, and blocked and sold again. There was no pea under any shell, and it all caught up with them when even liar loans and wink-wink loans could no longer find a buyer. The cascade toward oblivion is under way, and there really does not appear to be an obvious bottom short of zero.....And it is not here, but world wide, and it all is crumbling off shore at a much faster rate. Evidently, the New American Economy, the touted service economy, ran out of people to service. Selling sno cones to tourists buying imported cars and fuel was not robust enough to support minimum wage workers buying $300,000 homes with no down, a cash bonus at signing, and an adjustable interest rate sure to crush you sooner than later. Where did we go wrong? And even the Super Fat Cats have problems, as witnessed by the precipitous fall so many amenity properties have taken at chi-chi resorts of gated little towns of Super Rich.
So, after pissing away $1 trillion on wars, $1 trillion on fat cat tax breaks and $1 trillion on irresponsible, greedy, thieving, rotten entitled Wall Street (except Lehman Bros and my Roth IRA-we both got nothing) bankers, we now are being fiscally responsible and going to save the world on this next $3/4 Trillion. Ever pound sand down a rat hole? Piss into the wind? Plant chocolate drop seed in the garden? All those are better conceived economic plans than we are getting out of a Congress so far out of their league, their understanding of the world, as to be a great source of morning humor in reading the newspapers. All you have to do is read the public works the stimulus will provide your state in the many sources you can Google. When you are broke, how does it make sense to build a social services building? You can't pay the current staff nor the needed staffing level. You can't afford to heat or keep the lights on offices now, so the 4 day week is coming in government. You take land out of private hands and off the tax rolls, further limiting revenues. The list goes on and on. So how do you plan to help the people that come to the new building? Where is the money to rent them an apartment, buy their dope, their prescription drugs, their counseling, pay their food and utilities? Show me the money!!! Where are you going to get it? WE borrow for the stimulus to build an edifice that requires we borrow more. The old hook tender told me that was akin to wipin' yore butt on a hoop...ya run outa spots to grab...It all looks like were are on a ride to our own "Slumdog Millionaire" stories in the future.
Where to start; well, a remedial economics class would help.
Then:
why are we madly mixing discussion of household, state and federal spending? They are all different beasts.
Why is making severe cuts in a sstate budget a good thing? Only becasuse it is a Republican talking point, not because the author can think on his own two feet. Consider: giving poor people security in their jobs is considered bad. The fact that poor people tend to use tehir money to survive, thereby propping up an economy that benefits the rish is totally ignored.
I could go on and on. Rational debate goes out the window when you are wingnut. All you can do is shout talking points louder and louder.
No, your ignorance cannot be forgiven, nor even overlooked.
First off, Bush's stimulus package was a gigantic tax cut to the upper earners, which increased savings and decreased revenues.
Are those words too big?
Once in a deep recession, there is very little chance of getting out without massive government spending. Once in a recession, that spending increases the generation of future revenues back to the government, as well as increases the amount of money in the system over a period of time. In the case of this stimulus package, you will see an increase in spending at the bottom due to tax credits, lower and middle income tax cuts and reduced tax withholdings. As the end of the benefit of that small boost is reached, the increased infrastructure spending, along with research and development spending, begin to kick in, thereby granting a longer term job market increase.
But please, feel free to spout of inane stuff that has no basis in reality, much like bearbait does in every single blog entry he pastes in the comments.
Hint to bearbait: toxic mortgages themselves weren't the problem, but please, keep trying to blame the defenseless lower class, it makes you look like a stud!
The great and wonderful government is supposes to make rules and laws to protect the private sector. What they have done is reduce regulations and rules to the point banks were loaning one dollar thirty times. Its no wonder the banks are failing the government didn’t do its job.
If you think the government spending money, it does have will help. I can tell you how it will work out, that dollar in your pocket is going to be worth fifty cents then twenty-five cents. Sure sounds like a great idea to me.
Now we can try to mitigate the current financial debacle by spending our tax dollars on creating jobs rebuilding our country, or we can start a world war and create jobs destroying other countries. Our choice.
What isn't our choice is how much money it will take: It will take spending on par with WWII. Unfortunately, Republicans (and talk radio hosts like Rush Limbaugh) will scream if we use money for anything other than destruction.
The government hasn’t been backing more than 70% of the home loans?
The government hasn’t been making student loans?
I guess I just don’t get it. If everything is the same now why is the dollar worth 10% of what it was 30 years ago?
Why is the economy grinding to a halt?
Oh just wait the government is going to spend money it doesn’t have then everything will be just wonderful.
Madoff, it turns out, had not bought a stock or traded a stock in 13 years. His position was so good, so unchallenged, that under Clinton administration oversight, he quit buying or selling stock for his Ponzi and just took investors money and paid older investors a dividend, until he could no longer lure enough loot to pay the dividends, while people who lost in other areas needed to take out money in Madoff's care..the jig was up..
The pension funds for public employees was an endless, huge pot of gold, and the hustle to tap that keg was intense. Add to that the collected, but not yet needed public monies, needed to be parked and earning for the public. Huge amounts of money. Around the world, too. The losses to towns and groups around the world are immeasurable. The private side did not have the means to earn on that much money, which was in surplus, so they invented financial instruments which they sold that had zero tangible value. They sold hot air to hot air buyers who had to buy something because that was their job, their mandate. When the liar loan bubble burst, the ARMs adjusted up, it all fell apart in the 30:1 leveraged financial business. We got our pants taken down, and deserved to. My guess that it was not a Republican or a Democrat deal. After all, Obama got advice NOT to take public funding to run his campaign, and ended up raising just short of a Billion Dollars...and might passed that mark by now. He doubled the Republicans. So if the Fat Cat Republicans can only muster half the financial effort in an election, it is disingenuous to continue to paint with the Republican greed brush. The real money is in public employee unions. The Democrats seem to have that base covered. So now that you have the majority, Mike, we await the genius of your fellow travelers and the Democrat majority in solution to this crisis brought about by lending money to people who could not pay, and why care, because US Govt backed Fannie Mae and Freddie Mac would be there to catch the failures, stop the wild pitches, and put up a good target for the pitchers of the American Dream. They evidently were not up to the task, and got bailed out by Congress. Now the bailouts continue and nationalization of the banks is next. Actually, the privatization of the Fed is perhaps the problem, and while we are nationalizing the banks, the Fed needs to be nationalized as well. Put the Treasury back into the business of printing money, and backing our currency.
I keep looking for the bottom of the maelstrom, this economic whirlpool. I was helping bring a troller down from Alaska late one summer, and tried Seymour Narrows with a half hour left in the tide. We ended up for a minute in a whirlpool that was intent on eating the 40 foot boat we were in. Hit the throttle and pushed it to high hum, black chunks and red cinders belching from the exhaust of a tired 6-71, in an attempt to drive out of it. I could not see bottom in the whirlpool and for whatever reason, our poor hygiene perhaps, the darned thing just spit us out and we slid into Campbell River with a need to launder shorts. This economy is just as scary. No bottom in sight, the throttle pushed to beyond reason by our elected leaders, some we know are frauds, and I hope for some reason we get ejected from the morass sooner than later. And I don't see how beating the dead horse of the Republican Party gains us an inch in the race to escape the maelstrom. If it is saviors we are looking for, I don't see any at this time. Your crooks are no better than my crooks. Burris bought Blago's deal. How about them apples?
The revolt will happen when Jed Clampett, his oil money down to $33 a barrel, gets mortgage help, and the next door neighbor who has paid his mortgage on his smaller house for twenty years without help from Obama and Mike's Heros, gets fed up with pulling Phil Gram's metaphorical wagon. A lot has to happen between now and the elections in 2010. Good stuff. Because there will be alternatives on the ballot that year, and Nancy could get one last ride on her Air Force jet to San Francisco. And no return trip. Italians are being replaced in Baghdad by the Sea, by Asians, who might want less, to pay for less, and the chance to earn more and keep more. It is, you know, why they come to the United States of America. They are not here to help pay people to not work, to buy their homes for them.
Nice try, bearbait. Your bi-partisan sniping needs some work before anyone will fall for your trolls, though. You might have noted who was in congress, cutting regulations of banking standards in the 90's.
The reason this is Democrat vs. Republican at this point is that the Republican leadership wants more of the same. More tax cuts, damn the consequences. It's their last schtick and they're going to stick to it, no matter what the experts say.
And why aren't they listening to the real experts anymore? Republican anti-intellectualism. They hate those that are smarter, that know more and that are right more often. They do exactly the opposite and they ignore the reality, because as a Bush staffer said, they get to create their own reality.
So it is important to remember who has been at the wheels for the last 12 years, and who has played the fiddle while Rome burned. Now watch this drive.
We should also be developing our oil and natural gas reserves and it can be done in an evironmentally safe manner.We will be at the mercy of foreign countries. Obama has no plan to develop conventional energy sources. Most of this "alternative" energy is a pipedream. Plow up the prairie and destoy the wildlife habitat for crops subsidized for ethenol? Get real. Do you know an ethenol refinery costs five times more than an oil refinery? California? Legalize pot to save the bacon? Off-shore drilling is the answer in California..get real Governor.Queen Pelosi would never allow that! Four years of this?
And please, don't take my word for it, do a little of teh Googles thing and search for information on the San Francisco mouse, or maybe a little research on the sin train.
Glenn is lying to you. He's always been a liar, he's just telling you the lies you want to hear, so you're willing to accept it at face value.
Or, instead of actually learning something, you can keep using CAPS to try to prove that the only point you have is the one on your head.
Jack, you're a day late, a dollar short and you started the name calling, so stop trying to pretend you're above it. And learn to spell, you're an embarrassment.
The lack of earmarks seems to be driving the right wing crazy, unable to cope with an inability to attack a bill that America and American economists agree is one of the best ways to stave off a worsening recession and possible depression. No matter how many right wing idiots call it "porkulus" or some other titular fantastical tongue dancing nomenclature, it all comes down to the fact that the right wing of American politics is out of ideas, out of suggestions, out of its element. The right wing has lost more than an election. They've lost their mind.