The price tag of a new “stimulus” package keeps growing. And everyone is getting in line for their handout. Several of the nation’s governors, now that they have overspent in their respective states, are begging Congress (which really means YOU) for more than $156 billion in additional Medicaid funding and infrastructure spending. Gov. Rendall (D-Penn.) said there are 43 states that are facing deficits. I was able to find this article from the NY Times which lists at least 37 states.
Speaker Nancy Pelosi (D-Calif.) said she asked the president for a “small” stimulus relatively soon and I suppose it is possible that Congress could come back before the Christmas holiday to pass something. According to Pelosi, the president said he would “get back” to her. Let’s hope he decides to pack his suitcases instead. Pelosi admitted that any stimulus package may have to wait until January. That’s when taxpayers will see something really, really big. The last figure I heard is it could be another $700 billion. Just where are we going to get the money for this? From your children and grandchildren.
Meanwhile here is an interesting blog by economist Greg Mankiw. (HT to Laura Ingraham for her Dec. 2 broadcast.) Pay close attention to the discussion concerning the Bils-Klenow Stimulus Plan and the Fiscal Policy Puzzles. Note the study by Andrew Mountford and Harald Uhlig, now out of Chicago University, that states:
-
a surpise deficit-finance tax cut is the best fiscal policy to stimulate the economy;
-
a deficit [-financed government] spending shock weakly stimulates the economy;
-
government spending shocks crowd out both residential and non-residential investment without causing interest rates to rise.
Plus there is a new book out by Burton W. Folsom, Jr., entitled “New Deal or Raw Deal” that lays out why President Roosevelt’s economic program was a disaster and demonstrates that it did nothing to get the county out of the Great Depression. In spite of all the government spending and make-work programs (hmmm…like “green” jobs?), unemployment stayed in the double digits, with an average of 13% and going as high as 25%.
In light of that, perhaps it is time for Congress to finally come to the realization that more government spending will not work and that a better option is to cut spending and to allow Americans to keep more of their own money. Rep. Louie Gohmert (R-Texas) has proposed a “tax holiday” during January and February 2009. He wants to take the remaining $350 billion of the $700 billion bailout package that is still available to Treasury Secretary Paulson and give it back to the taxpayers by eliminating the personal income tax and FICA tax for the first two months of the year. You can read about it here.
What a great idea. That’s a stimulus package that will actually work.
Filed under: Budget, In The News, Waste
