06 February, 2009

Government may hold the solution to our problems, but....

short: …it does not follow that any and every government "stimulus" package is a solution. If nothing else, last year's stimulus bills, each of which failed miserably, should make that clear.

long: Personally, if I were the President, I'd be worried that many newspapers that endorsed me based on my aura of competence, have within two weeks of the beginning of my presidency, published editorials that echo Republican criticisms of the bill. To quote the Washington Post,
Mr. Obama praised the package yesterday as "not merely a prescription for short-term spending" but a "strategy for long-term economic growth in areas like renewable energy and health care and education." This is precisely the problem. As credible experts, including some Democrats, have pointed out, much of this "long-term" spending either won't stimulate the economy now, is of questionable merit, or both.
Remember that these words come not from Rush Limbaugh, the National Review, the Weekly Standard, or any other right-wing froth-machine. These words come from a newspaper that endorsed then-Sen. Obama largely because he wasn't associated with the unsavoriness of Republican political thought.

Sadly, the president's current reaction appears to consist in saying one thing to the public, and saying something else to his Democratic colleagues. If you paid close attention to his campaign, this isn't a surprise, since it's a longtime habit of the president to say one thing to the public, and another thing to his partisans. It may be common of most politicians, but it does suggest that Mr. Obama isn't the change that the Post was hoping for after all.

Still, let's consider one of the prevailing arguments a moment. It's true that Reagan famously said in his inaugural address, In the present crisis, government is not the solution to our problem, government is the problem.

People frequently misquote Reagan on this, leaving off the first four words of that quote. The crisis of 1981 is not the same as the crisis of 2009, and I'd say that the 1980s and 1990s largely proved Reagan right. Sadly, a frightening number of so-called "conservatives" seem to accept the misquote as the genuine article, and fling it around as if the chaos of "no government", or even "corrupt government", is preferable to "efficient government". I've seen "no government" and "corrupt government", and I want no truck with that.

On the other hand we have a frightening number of so-called "liberals" whose rhetoric is essentially reaction to the so-called "conservative" position above. These advocate for the current stimulus bill, saying that it is precisely the view that "government is the problem" that got us into the current economic mess.

I don't entirely disagree with their main point. I find it amazing that the economic movers and shakers of the late 90s (Greenspan et al.) resisted placing any regulation at all on the derivatives markets. If there's anything the left wing has correct, it's probably that government holds the solution to the present crisis. I especially would like to see (a) solid regulation enforcing transparency and ethical trading; and (b) solid enforcement of the regulations we have.

Here end our shared ideals. Sadly, liberals are gravely mistaken when they act as if that any and all government action is the solution to the present crisis. How else to explain their support for the current monstrosity being debated in Congress, and on which the president has foolishly staked so much of his own prestige?

IMHO this attitude lies at the root of the fundamental flaws in the attempts so far to stabilize the economy—be they last spring's $300 stimulus per taxpayer and child, last fall's $700 billion TARP, or this year's rapidly-increasing stimulus package. Many serious policy makers and economists have expressed grave doubts regarding the wisdom of each package. They were generally ignored or shouted down, with people insisting that these packages had to pass, given the urgency and depth of the current crisis. There was no time for reflection, no time for debate, no time for discussion.

I hope they're right that this bill succeeds in righting the economy. However, I doubt it's the solution to our problem. We have to stop throwing our grandchildren's money around, and start thinking carefully about what the problems are, and how they are to be fixed.

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