In his campaign for the White House, Barack Obama did talk at great length about the need to fix our economy, but he did not make a multi-hundred billion dollar “stimulus” the centerpiece of his economic plan.Â With the federal government having just shelled out $700 billion in the Troubled Assets Relief Program (TARP), the bailout, one would think that responsible stewards of the federal Treasury would not seek an even greater amount in additional government spending.
But, they are, even as the federal deficit reaches record levels, both in dollar terms and a a percentage of the gross domestic product (GDP). The stimulus bill the president says “is still on track.”
Megan McArdle wonders why some on the left opposed to TARP are indifferent the size of the “stimulus:”
How come progressives opposed to TARP II are very, very worried about the cost to the taxpayer, but not worried at all by the cost to the taxpayer of a massive fiscal stimulus, a lot of which is nearly guaranteed to be wasted by virtue of the speed with which the money must fly out the Treasury’s door?
Meanwhile, Stpehen Chapman thinks additional spending is not the solution to the problem, but the problem itself:
We all know how we got into this economic mess. We spent too much, borrowed with abandon, and acted like the bills would never come due. So what’s the prescription for getting out? Spending more, borrowing more, and acting like the bills will never come due.
When something sounds too good to be true, it usually is. This alleged cure deserves special scrutiny because it invites our policymakers to redouble the very policies that caused the crisis. Congress and the new administration are all too eager to abandon restraint so that we can overcome the consequences of excess.
As Glenn said in linking that post, “Yeah, that’ll work.”
The Democrats must be crazy, or blind to fiscal reality. I agree we need to do something to improve our economy. Real deregulation and budget cuts might help. While a vast increase in spending may provide a short-term boost to the economy, in the long run, it will only exacerbate our economic problems.
So, I suggest the majority party try a different tack, based on policies which work in the real world and not just on the “drawing boards” of liberal think tanks and universities campuses.