Much has been written about the recent stimulus package. At first I committed to not writing about it because I did not have much more to offer. I have since changed my mind and offer small doses of my perspective in this exciting installment.
Stimulus Musings , in bite size offerings
When you consider that debt played such a critical role in the genesis of this financial debacle, is it not worth 15 seconds to consider that heaping mounds of new debt on top of the problem is perhaps not the best solution? This is not a hole we can dig out of.
Huge bushels of the bailout dollars are going to state and local governments to help stimulate the economy. …wait for it… yes there it is. Local governments are not exactly pictures of efficiency. When was the last time you visited the DMV? And can you even look at a fat, puffed up, red-faced local politician and NOT envision at least some level of whitewashed corruption? Yes, it is a stereotype but for a reason.
Even when state and local governments spend money on infrastructure they often get it wrong. A perfect and recent example is in Atlanta where I-75 north was under construction for over a year so an extra lane could be added, and it was needed. When the new lane opened it was quickly obvious that the math was wrong. The roadway noticeably slanted towards the median and the guardrails appeared to lurch into the roadway. Within days the number of wrecks increased and within weeks the new lane closed. Now we have an extra large shoulder on the left side of the highway. Untold millions spent for a new shoulder on the highway? And these guys are charged with rebuilding our infrastructure AND stimulating the economy. Moma mia is right.
Are you hearing the manner in which the media is boasting how the stimulus funds will be used by state and local authorities? The money will be used to cover existing deficits. That tells us that we are borrowing from the inefficiencies of the federal government to pay for the inefficiencies of state governments. It also tells us that a vast majority of these dollars will be spent on pre-existing budget initiatives. In many instances the number of true dollars being spent or projects being funded will not increase but rather the ineptitude of local government will be paved over by the great infrastructure plan of 2009. Yes, the pun is intentional.
Alas, my favorite, the tax deduction for new car buyers. This is so rich I hardly know where to begin. I suppose the obvious nod goes to politics-as-usual, something in which this leadership group vowed not to participate. So obvious is the stench from this glad-hand to the Michigan delegates. But even more transparent is how this piece of legislation assumes, is counting on for its very success, the idiocy of the electorate. Real people across the economy are struggling and the pick-me-up the government offers is a tax credit on the purchase of a new car. Is that supposed to be punch line? A tax credit on, next to time shares, the worst purchase a person can make? Really, that’s what you have. A tax credit for a horrible purchase (new cars lose roughly 40% of their values within the first 2 years) to help prop-up an industry running a failed business model, which, by the way, we are also bailing out too?!?
This is wired to fail AND make the government look good. Screen writers have never been so creative.
In the end, we appear to not comprehend that the true nature of a bailout is to get the water OUT of the boat. Rather we have a centralized government borrowing money from our future to cover the inefficient debt-riddled local governments meanwhile we offer incentives for the citizenry to take on more debt in a effort to prop up car manufactures. All the while no one has an interest in actually plugging the hole in the hull.
To be sure, this ‘plan’ will generate jobs. There’s simply too much money been tossed around for that not to happen. But drug use, forest fires, and liquor store robberies create jobs too, just not the kind that help to propel society forward.
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