This was exactly my feeling as I listened to Obama. It's easy to look good when tearing down straw men.
http://online.wsj.com/article/SB123561484923478287.html
Thursday, February 26, 2009
Wednesday, February 11, 2009
Cost of Stimulus compared to Iraq War
From this day forth, I hope I never hear a pro-stimulus advocate say another word about the dollar cost of the Iraq War. We can talk about the human cost but that would be a different blog.
This week's stimulus plan is coming in around 900 billion. That's about 1 trillion dollars, or about 7% of our entire GDP (and this on top of the trillions of stimulus and bank aid already doled out). The entire projected ten year cost of our involvement in Iraq is 1 trillion dollars, or 100 billion a year (See this analysis ). When President Obama signs this bill, it will have about the same financial consequences as the 2003 Invasion of Iraq.
I realize that money spent in Iraq is not the same as money spent in the U.S. But it is no worse than "stimulative" expenditures that create no long term infrastructure. (5% or less of the current stimulus plan actually goes to infrastructure.) Every Humvee, tank, or tomahawk missile purchased sent income to American firms, engineers, workers, and local economies. Every soldier who receives a paycheck saves it in largely American banks and spends it on products imported from the U.S. and sends money home to families in the U.S. Need we forget that WWII is what finally got us out of the great depression? (Not a fun way to get out of a depression).
Patronage by another name: The political usefulness of stimulus
In my last post, I talked about the nature of stimulus and why, at best, it adds only a few percent to the GDP. But at worst, it puts productive labor into less productive uses. People who are driven by market price signals work really hard to find efficiencies that improve our standard of living. Government often picks projects based on political usefulness, not efficiency.
The 1930 Great Recession was triggered by the missteps of a Republican administration (just as the 2008 recession was). But it took a Democratic administration, coupled with continued poor monetary policy by the Fed, to extend the recession into a 10 year depression. But worst of all, Roosevelt used the depression to permanently institute widespread dependence on federal government patronage. The depression was a political tool. And so it is with Obama today. Recently at the Elkhart town hall meeting he admitted the usefulness of the "crisis": "if we don’t use this crisis as an opportunity to start retooling..." And Obama's chief of staff has said, "Never let a serious crisis go to waste."
Roosevelt used his fiscal power to control elections. WPA workers were reminded who their benefactors were. Greater federal funding was promised to voters...if they voted correctly. Patronage went to the party faithful and was denied those who dare cross the President. Roosevelt attempted to take over the courts (through court packing) and he tried to buy influence over the legislative branch.
President Obama will not go to these extremes. But does anyone doubt that the stimulus will find its way into the pockets of Democrats to a larger degree than Republicans? Who will stimulus recipients feel obligated to vote for in the next election? That said, I do hope we can make lemonade out of this lemon. We owe it to the President to keep him honest and accountable.
This week's stimulus plan is coming in around 900 billion. That's about 1 trillion dollars, or about 7% of our entire GDP (and this on top of the trillions of stimulus and bank aid already doled out). The entire projected ten year cost of our involvement in Iraq is 1 trillion dollars, or 100 billion a year (See this analysis ). When President Obama signs this bill, it will have about the same financial consequences as the 2003 Invasion of Iraq.
I realize that money spent in Iraq is not the same as money spent in the U.S. But it is no worse than "stimulative" expenditures that create no long term infrastructure. (5% or less of the current stimulus plan actually goes to infrastructure.) Every Humvee, tank, or tomahawk missile purchased sent income to American firms, engineers, workers, and local economies. Every soldier who receives a paycheck saves it in largely American banks and spends it on products imported from the U.S. and sends money home to families in the U.S. Need we forget that WWII is what finally got us out of the great depression? (Not a fun way to get out of a depression).
Patronage by another name: The political usefulness of stimulus
In my last post, I talked about the nature of stimulus and why, at best, it adds only a few percent to the GDP. But at worst, it puts productive labor into less productive uses. People who are driven by market price signals work really hard to find efficiencies that improve our standard of living. Government often picks projects based on political usefulness, not efficiency.
The 1930 Great Recession was triggered by the missteps of a Republican administration (just as the 2008 recession was). But it took a Democratic administration, coupled with continued poor monetary policy by the Fed, to extend the recession into a 10 year depression. But worst of all, Roosevelt used the depression to permanently institute widespread dependence on federal government patronage. The depression was a political tool. And so it is with Obama today. Recently at the Elkhart town hall meeting he admitted the usefulness of the "crisis": "if we don’t use this crisis as an opportunity to start retooling..." And Obama's chief of staff has said, "Never let a serious crisis go to waste."
Roosevelt used his fiscal power to control elections. WPA workers were reminded who their benefactors were. Greater federal funding was promised to voters...if they voted correctly. Patronage went to the party faithful and was denied those who dare cross the President. Roosevelt attempted to take over the courts (through court packing) and he tried to buy influence over the legislative branch.
President Obama will not go to these extremes. But does anyone doubt that the stimulus will find its way into the pockets of Democrats to a larger degree than Republicans? Who will stimulus recipients feel obligated to vote for in the next election? That said, I do hope we can make lemonade out of this lemon. We owe it to the President to keep him honest and accountable.
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