03 February 2009

Is It Too Much to Ask for a Sustainable Stimulus Package?

Shouldn't any policy have to be sustainable?

As Obama pushes for a stimulus package, it seems to me that the biggest concern is that we'll spend trillions - literally - on economic programs that simply defers the inevitable. Getting Americans to spend money we don't have to buy things we cannot afford is not a novel solution to our economic problems. I might even suggest that such an approach has helped to put us into this recession.

I love the idea of approaching alternative energy development as if it were NASA or the Cold War. This is great because it not only could create employment and help to stimulate the economy but it is a solution that can become sustainable - creating an entirely new industry that becomes not just self-financing but something that could more than pay back any investments made today.

I do not like the idea of subsidizing home purchases. Already home prices are too high and the struggle to finance these inflated prices helped to create the mortgage crisis that dominoed into the financial crisis. Home prices that are such a huge multiple of incomes are simply not sustainable and stimulating the housing market seems to me just a distortion of a natural equilibrium.

Some of the items in the stimulus package could help to create a shift. Others are simply sending good money after bad.

For me, the filter that ought to be applied to every item in this stimulus bill is this: will it help to create jobs and will those jobs eventually lead to something sustainable? This is the difference between using credit for shopping and using it to start a small business.

This is a great opportunity to create new industries, technologies, and products. It might be worth looking at this trillion dollar spending package as something transformative, something to position us for 2015 rather than an attempt to just get us back to 2006.

7 comments:

ThomasLB said...

I don't quite understand what they're up to, either.

If I, as an individual, suffer a loss in salary and make up the difference by using my credit card, I'm doing something unbelievably stupid that will eventually lead to my ruin.

But when the government does it, it's a "stimulus," a good thing, and must be done without delay.

I think government needs to just admit that our standard of living is going to decline, at least for a while, and adjust their policies accordingly. They're all grown-ups, right?

smarterworld said...

Perhaps so Ron, but if Obama wants to get re-elected he has to fulfill his multitude of campaign promises which includes some pretty quick solutions.

The problem I see here is that he dug his own grave during the campaign and now that reality has set in, he's desperately trying to fill it back in again with phrases like "long term economic growth" and dire warnings that the problem will not be "fixed in months, but years."

Good luck trying the American patience that long. We've turned into a 'fast-actin'-tinactin' society.

Anonymous said...

"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." --columnist Steve Chapman

wheelsonthebus said...

that's the only filter that makes sense.

nunya said...

Do you ever read Jim Kuntsler's blog?

Ron Davison said...

Thomas,
a temporary stimulus that spends what we don't have might make more sense - if it were really temporary and not on the heels of 7 years of such behavior.

Damon,
there are two problems that are all mixed up: stagnating incomes and consequent pinch and the current recession. If Obama loses sight of the first by focusing on the latter, it seems to me that he may be losing a once-in-a-generation opportunity to change things.

anon,
great quote.

Emily,
Thank you.

nunya,
No. But I will look at it, thanks.

David said...

So I'm watching Tim Roth on a new program ("Lie To Me" - no it's not about Congress and the President) and he takes a shot at NASA and the space program saying it was built on a scam. Wow. Is David Kelley the producer? I don't know.

Do you think they'll take the same shots at alternative energy programs? I kind of lean that direction.

Before I'm attacked I'd like to say that "superconducting" would be a breakthrough. If we only live where it's -171 farenheit.

Wouldn't that make Sarah Palin our leader?