The abiding image of the passage of President Obama’s
“stimulus package” is of a senator holding a pile of paper a foot high and
admitting he had not read it.
In fact, politicians rarely read the laws they pass, but it
is even rarer that they admit it. In this case, however, it would be difficult
to deny. There is no way he could have read it – certainly not in the time
Congress was so keen to be seen to be doing something that
it paid little attention to what it was doing.
As a result, we end up with a huge public spending bill that
to do with economic stimulus.
There are huge increases in spending on health, education,
public works, and the like. Whether these are good or bad in their own right is
not a matter for this blog. What is of concern for business is that any
economic benefits of injecting cash in this way will be more than cancelled out
by increases in taxes and deficits.
Hardly anything in the package is designed to make business
more competitive. Some businesses – the sort who give big donations to election
campaigns – might get some nice government contracts, but most will get nothing
but the bill to pay.
Instead of thinking how cash can be injected into the
economy most efficiently and equitably, the politicians have simply used the
recession as an excuse to rebrand all their cherished spending projects as
“stimulus” and get them through on the dubious pretext that any spending must
be good for the economy.
Meanwhile, the real needs of the economy remain unaddressed.