So says Jeffrey Sachs,
The US debate over the fiscal stimulus is remarkable in its neglect of the medium term — that is, the budgetary challenges over a period of five to 10 years. Neither the White House nor Congress has offered the public a scenario of how the proposed mega-deficits will affect the budget and government programmes beyond the next 12 to 24 months. Without a sound medium-term fiscal framework, the stimulus package can easily do more harm than good, since the prospect of trillion-dollar-plus deficits as far as the eye can see will weigh heavily on the confidence of consumers and businesses, and thereby undermine even the short-term benefits of the stimulus package.
Not to mention foreign investors whom we’ll need to buy up all this debt.
We are told that we have to rush without thinking lest the entire economy collapse. This is belied by recent events. The spring 2008 stimulus package of $100bn (€76bn, £71bn) in tax rebates was rushed into effect in a similar way and we now know it had little stimulus effect. The rebates were largely saved or used to pay down credit card debt, rather than spent. The $700bn troubled asset relief programme bail-out was also rushed into effect and its results have been notoriously poor.
So obviously we need something bigger and $900 billion is larger than $800 billion, so there. Nothing to worry about.
The Tarp has not revived the banks or their lending, but it has supported a massive transfer of taxpayer wealth to the management and owners of well-connected financial institutions. Some of those transfers — as in the case of Merrill Lynch using its government-financed sale to Bank of America to enable $4bn in bonuses last month — are beyond egregious. Yet the US is now inured to corruption and in such a rush that even billions of dollars of public funds shovelled into Merrill’s private pockets in broad daylight barely merited a day’s news cycle.
I’m just trying to figure out how I can get in on the pork train that Team Obama is cooking up. I’d like some bacon, some pork chops, and some baby back ribs please.
Seriously what is up with all these moronic programs? Why are we going to spend $355 million on STD prevention in a bill to stimulate the economy (no pun intended). Seriously, everybody says, “We need to get the money to the people who will spend it!” Okay, here is an idea and its simple and easy. Take a significant chunk of that money and send it directly to the bottom 20% of the income distribution. They’ll likely spend it so you’ll get that multiplier everyone argues over…well your more likley to anyways. Instead we have all these special little programs. Gotta cater to those lobbiests during these troubled times.
