No Consensus for “Stimulus” Among Economists
Contrary to claims by the Obama administration, there is no consensus among economists for a “stimulus” package, much less the trillion-dollar pork-filled “stimulus” package being crafted by Obama and liberal Congressional leaders. (Many economists oppose it). Even the liberal Washington Post, which has not endorsed a Republican for President since 1952, admitted this today: “Fiscal stimulus is far from a sure-fire remedy. Economists disagree about the efficacy of every pump-priming effort from the New Deal to last year’s tax rebates. In general, fiscal policy had fallen out of favor in economics. . .Many economists note Japan’s failed attempt to borrow and spend its way out of a recession during the 1990s” through “repeated stimulus packages. As it is, Japan piled up a massive debt and recovered only modestly, leaving it vulnerable to today’s downturn.” (See Editorial, “Priming the Pump,” Jan. 25, pg. B6).
The Obama Administration’s claim to economic expertise is odd, given that Obama’s nominee to head the Treasury Department and oversee economic policy is the “non-economist” Timothy Geithner, a man whose chief claim to fame is having worked on prior bailouts in which taxpayers were shafted, and he arguably “was had by crafty bankers.”
(Ironically, Geithner, whose responsibilities as Treasury Secretary will include overseeing the IRS, failed to pay income taxes (specifically, self-employment taxes) despite being specifically advised to do so by a past employer, even though he received an allowance from his employer to enable him to pay those very taxes).
Geithner has often been described by Obama staffers and liberal journalists (like David Broder of the Washington Post and Peter G. Gosselin of the Los Angeles Times) as an “economist.” But Geithner has neither a doctorate nor a bachelor’s degree in economics (although “international economics” was part of his Masters Degree studies). If Geithner qualifies as an economist, then so do I, given my economics background. And I consider Obama’s trillion-dollar stimulus proposal a disaster.
All the talk of a stimulus is resulting in a log-jam in state legislatures as legislators put off hard choices in the hope that Washington will bail them out, delaying passage of state budgets. In Virginia, for example, the Washington Post reports that “Legislators from both parties are guilty of assuming that President Obama will come to the aid of states with a stimulus package, and they aren’t taking the budget gap as seriously as they should.” Meanwhile, Maryland’s big-spending government, which pushed through record tax increases last year, is drawing up an extravagant wish list of new spending proposals it hopes will be funded by Obama’s budget-busting stimulus package. Obama’s plan has sent a “thrill” through irresponsible local officials, who even the Post has recently criticized for allowing public-employee pensions and benefits to skyrocket out of control.
The stimulus package is also contributing to the credit-freeze that left some businesses unable to borrow to meet payrolls. Banks are reluctant to lend money without knowing who will be the winners and losers from provisions buried in the 600-plus page stimulus package. And the money in the stimulus package will be spent mostly in future years — like 2010, an election year — not this year, when economic relief is most needed.