With everything else going on, there is a relatively quiet debate ongoing in Washington about whether the economy needs more stimuli from the federal government. In our view, it does not.
Congressional Democrats, according to an Associated Press report from last week, are working on another list of relief efforts, including the expansion of a tax credit for first-time homebuyers, creating a new credit for companies that create jobs and extending subsidies to cover health insurance for laid-off workers under COBRA.
The government has already committed $787 billion to stimulate the economy and only about a half of it has been spent. And the jury is still out on the effectiveness of that stimulus package.
Unemployment is at 9.8 percent now, but we don’t know what it would have been without the first stimulus package. Interest rates are at an extraordinarily low level, but we also don’t know if those have spurred near-term investment or if they affect inflation.
Our deficit for 2009 is now estimated to be $1.4 trillion, with similarly large amounts in the near future without further stimulus from the government.
No doubt that the government has pumped a huge amount of money into the economy. In doing so, the government has radically increased the national debt.
The only thing that seems readily apparent is that our children, grandchildren and great- grandchildren will be faced with the burden of debt we are laying on them. We can’t pay for it in our lifetime, that’s for sure.
Even lawmakers who are pushing for more stimulation efforts know that there is going to be resistance. According to the AP report, all those proposals are being sought separately, because together, it looks like a stimulus package. And they don’t want to call it that.
We haven’t even mentioned health care reform, a cap and trade program and other looming financial problems. The president and Congress must take a deep breath and wait a while to see what happens economically before launching us further into an unknowable financial future that already looks very grim.
