Stimulus Wars

by Pejman Yousefzadeh on July 8, 2009

The arguments made by those on the port side of politics, concerning the stimulus and a possible Son of Stimulus are contradictory, to say the least.

On the one hand, we are told by people like Paul Krugman, that we need to give the stimulus a chance to work. On the other hand, people like Paul Krugman have been telling us that we need a second stimulus. Well, if we need to give the first one a chance to work, why do we need to jump to a second one? Paul Krugman never addresses this question.

Contradictions are replete in the Obama Administration’s arguments as well:

Five months after Congress approved a massive package of spending and tax cuts aimed at reviving an ailing economy, the jobless rate is still climbing and the White House is scrambling to reassure an anxious public that President Obama’s prescription for economic recovery is on the right track.

Yesterday, Obama took time out of his first presidential trip to Moscow to defend the $787 billion stimulus package, arguing that the measure was the right medicine at the right time. “There’s nothing that we would have done differently,” he told ABC News.

Nothing? After thoroughly misreading how the stimulus would affect the employment picture? And here we thought that George W. Bush couldn’t admit an error.

But fine. Assume for a moment that the President genuinely and reasonably believes that there was nothing more that could or should have been done regarding the first stimulus package. Now, tell me why it is that Democrats on the Hill are talking about the need for a second stimulus:

“Just 130 days out on the adoption of a very, very major effort to get the economy moving, certainly I don’t think we can make a determination as to whether or not that’s been successful,” House Majority Leader Steny H. Hoyer (D-Md.) said yesterday. But, he said, “I think we need to be open to whether or not we need additional action.”

Hoyer’s argument might be respectable if he simply said something along the lines of “Look, the first stimulus was too timid. It’s not working. We may have thought that it would work in the past, but we were wrong. We need a second stimulus. Quick. Before really bad things happen to the economy.” But he is not saying that. Instead, Hoyer is saying that he doesn’t think we can tell whether the first stimulus has been successful, and oh, we need a second stimulus. And he does so without telling us how anyone can settle the debate over the latter position without first settling the debate over the former one.

So, the Democrats’ position is pretty much clear as mud, and when one considers that they are addressing whether to spend hundreds of billions more on stimulus, that’s pretty scary. Republicans may not have the political muscle to affect anything when it comes to the consideration of a second stimulus package, but if they keep pushing Eric Cantor’s commonsensical arguments, that might change:

Republicans, meanwhile, pounced on news that the unemployment rate increased to 9.5 percent in June and accused the Democrats of sinking the nation deeper into debt to finance an economic recovery package that has failed to save American jobs. Noting that the Obama administration predicted earlier this year that stimulus spending would keep the unemployment rate under 8 percent, Rep. Eric Cantor (R-Va.), the No. 2 Republican in the House, said, “I think any objective measure would indicate there’s a failure when you have a commitment of nearly $800 billion in taxpayer funds and you have the type of job loss we’re experiencing.”

  • HSR0601

    In regard to the stimulus investment, my understanding is as follows:

    1. The current surging fuel cost is overwhelming the market rally.
    And the pending clean energy bill might serve as a second stimulus package world-wide boosting private investments.

    2. People are so worried about losing their job, coverage, denial of treatment, which seems to increase bank deposit latetly. That means stimulus funding mainly goes toward bank deposit for a rainy day increasing jobless rate. It proves again that a healthy society yields better productivity, prosperity.
    It is time to 'Change' the notion of the public health as a fundamental human right and install 'a safety system for all' like all of the other industrialized nations, I think.

    3. The stimulus funding begins to mobilize just 11%, meanwhile, the auto industry has moved to its restructuring with the massive job-related impact.

    4. The pandemic swine flu has been hurting the global economy seriously.

    Thank You !

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