Stimulus Money Is Helping - Or Not
Once again, the debate over stimulus spending and its effect, if any, on jobs, jobs, jobs, is firing up in the capital. There are so many sets of conflicting statistics floating around that it is almost pointless to review them.
What we do know is that there are a great many unemployed folks out there, that the unemployment rate is stubbornly hanging around just under 10 percent, and that it would be higher if so many people had not given up looking for work.
It would appear that most of the stimulus money spent so far has gone to the states to retain existing government jobs — teachers, police, firefighters — thereby moving state payrolls onto the national debt and allowing them to defer the hard decisions they will have to make eventually. My own observation of the narrowly limited landscape between the Sandhills and Kansas City did not reveal much in the way of highly touted “shovel-ready” construction projects, or even routine maintenance.
There is supposedly some large part of the stimulus money still unspent. It is supposedly going to launch a big round of construction projects this summer. That will supposedly move along the recovery we are supposedly having, presumably in time for the election. Supposedly.
Meanwhile, the Keynesians among us, perhaps most notably the ever-voluble Paul Krugman, lodestar to Co-President Pelosi and Harry Reid, call for more spending, even though hundreds of billions of previously legislated dollars have apparently not yet been spent.
Unfortunately, our government has already made a hash out of utilizing the trillion or so dollars so far appropriated to boost the economy. For that amount of money, it could simply have written a $3,000 check to every man, woman and child in the country. Or it could have reduced taxes.
Now it is too late. Momentum, even in Congress, is building against adding further to the deficit, and so it should. With precious little to show for bureaucratically dribbling out a few hundred billion dollars, there is not much appetite to dribble out even more. Now there is electoral panic in the face of tea partiers and other suddenly fiscally responsible voters. This is new territory. Congress has never heard these sentiments before.
Now, the very folks who swallowed Keynesianism whole want to reverse course and increase taxes in a sudden paroxysm of fiscal responsibility. This would be the surest possible path to an extended recession.
In all the debate about borrowing and taxing and spending, the core problem is seldom discussed. It is this: Government, all government, is a parasite on the economy. That is not to say it is necessarily bad. There are lots of parasites in nature, from the bacteria in our guts to pilot fish on sharks that perform useful functions.
Parasites only become a problem when they become so big that they threaten their hosts. That is where we are now. Government does not produce anything; it only consumes. It would be one thing if this consumption were supportive of its host, the economy; if it provided effective laws and regulations to help its host function better; if it did not suck out more blood than the host can spare.
In nature, a parasite that drains its host dry must either find a new host or die. Without pushing this metaphor over the edge, it’s easy to understand that there is no alternative host available in this case.
Massive expenditures of borrowed Chinese money simply cannot be managed effectively or efficiently by our bloated, bureaucratic government. What the economy desperately needs is calm and certainty; calm from the hyperventilation of politicians and pundits who hourly remind us of our dire straits; certainty that tax regulations and rates and other government intrusions will be reasonable and predictable.
Those conditions, and the passage of time, will produce very satisfactory results.
Fred Wolferman lives in Southern Pines. Contact him by e-mail at email@example.com.
More like this story