As the debate rages on in Congress and now the Senate, on how best to answer the economic crisis in the US, one gross question is how to inject some badly needed cash into the system. This seemingly wrong idea, namely that you must spend your way out of a crisis, is Keynesian, or taken from the economic theory put forth by John Maynard Keynes, which suggests that to spur economic growth, the government should spend tax money on public projects, reduce taxes so the rich can have more to invest in businesses, and lower interest rates, so that businesses can borrow more affordably for more expansion and more growth.
And there are many other equally plausible economic theories. My favorite is the Anarcho-Capitalist theory, which essentially abolishes the state completely, and the people govern themselves through voluntary, natural motives surrounding the primary pursuit of prosperity via individual freedom.
But that will never happen.
Keynes wins this round (for now). Taxes are relatively low, Bush saw to that. The Fed, whether at it's will or driven to it by the bank failures, has dropped interest rates to the floor, 0% in the case of government backed bonds. So all that is left is to decide the best way to infuse cash into the economy, to pull off the Keynesian trifecta of prosperity. And this is now precisely the problem, which appears to be going to take a while to settle.
While Obama was promising a bi-partisan approach to the economic spending bill, also known as the Stimulus Package, the Democrats were busy stimulating their own packages, by introducing all kinds of questionable pork projects, playing right into the hands of the now very lean and somewhat meaner Republicans, who gleefully pointed each slice of bacon, out to the Press, who are all too eager to report on the slightest snippet of news about the ever increasingly handsome Obama.
The new president should have known better, but chalk it up to merely his first 7 days of experience, to learn the hard lesson, that bi-partisan means bi-partisan, and you don't actually let Democrats submit their foolish ideas. You especially don't let the Republicans see those foolish ideas and jeer them. Given the sheer intelligence this President has in comparison (pick any past President), it would have been better for Obama to have written the bill himself and submitted it for approval by both sides. A bit dictatorial to be sure, but you can't just Hope for Change.
In essence, it now appears after the very first opportunity to mend their ways failed, Obama is in fact going to have to actually stop being a Democrat for a minute. Sparing the rod now, is completely wasted, when the child is already this spoilt rotten. Start some serious spanking of the leaders (Pelosi, Boehner, et al), and the rest will sit up, comb their hair and brush their teeth, and stop all this juvenile partisan getting-even.
The Republicans are no better. By refusing the Bill, either they showed courage in standing up against the poorest of odds, or they are seriously deluded gamblers. Because if they bet wrong and the Stimulus Package shifts the economy back on track, they may have very well destroyed what little is left of their now dismal party. If they bet correctly, and the stimulus package doesn't improve things right away, there isn't really much to "I told you so" about, because then they will have come off as the truly "do nothing" party. And in America, doing nothing is worse than doing something. "At least we tried" is always better than the "I told you so" argument. It's very puritanical. Organic even.
So, looking at how best to spend the now $900 Billion planned, where to put it, seems daunting to say the least. The thing that almost everyone of the Keynesian persuasion agrees, is that what you don't want to happen is nothing. That lesson was learned from the banking bailout under the much criticized and worse, ongoing TARP program. Banks that were failing, were given Billions in cash, only to pay each other ridiculous bonuses for precisely failing at the helms of some of America's finest financial institutions. Some merely built up their own cash reserves. Not much made it to outright lending, as was hoped.
Now with unemployment at a precarious high, and with jobs being cut by the tens of thousands each day, it is thought that giving working America a tax break at this time, will not end up in the Great Shopping Mall of America as is hoped. During a crisis like this, people tend to save any extra cash they receive. For the rainy day is today. Public works projects, while boosting construction jobs, more really means boosting asphalt and roadway paving jobs. Certainly not the kind of high tech, white collar, service sector, middle class stimulus everyone is expecting. And if anyone knows how fickle the job market is, construction workers do. So they won't likely spend much of the boost, precisely because they know it won't last. No matter how low a new Hybrid Chevy truck goes for.
So what to do? Obviously there are many jokes circulating about how to turn the economy around. The Daily, Tonight, Late, Late Late, and other comedic talk shows have been having field days with this topic. All except Oprah who is too busy, enjoying her own Obama honeymoon, to care.
But sometimes a joke can turn into a serious idea. One joke of an idea is the pre-paid debit card. You've all seen them. They come in almost every single variety, whether good for purchases at Target, Barnes & Noble, Starbucks, I've even seen one for McDonald's. You can even get them as generic Visa cards. Normally reserved for the growing "I was too lazy to buy you a real gift" crowd, these vehicles actually have some merit. They can't be exchanged for cash. They can only be spent in a store. They almost always make you buy more than the amount on it, nudging you to come up with the extra cash to buy that next higher priced thing you didn't need, but now desperately want. In effect, they stimulate you to spend.
So, what the government should do, it seems, is issue every verifiable person it can find, a pre-loaded Visa card. The cards would only be good for purchases made in 2009, so you'd have to spend it relatively quickly. And you can only spend it, no cash allowance. Spend it on bills if you want, spend it on gas, spend it on food, spend it on your wife, spend it on your mistress, spend it on yourself, spend it at the zoo, spend it, spend it, spend it any way you damn well please. But spend it please! If it wasn't sacrilegious, you could even use MLK's "I have a dream" speech to get people to spend. Something along the lines of,
"And when this happens, when we allow cash registers to ring, when we let them ring in every qwik stop, fashion village and every hamburger hamlet, from every strip mall and every Circuit city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, Republicans, and Democrats, will be able to join hands and sign in the words of that Old Navy spiritual:
Free Shipping at last! Free Shipping at last!
Thank God Almighty, we qualified for Free Shipping at last!"
OK, I totally have to apologize for that.
But I figure if there's 300 million Americans, and $900 billion to spend, that comes out to something exactly like $3,000 each. Or if you spend it at Costco or Wallmart, that will get you almost $10,000 in poorly made Chinese products and last year's discontinued models of weird name laptops, odd sized HDTV's, and other assorted glittering electronic gadgets.
But the Nintendo Wii will still be out of stock.
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