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2/10/2009
Burri: How to survive the 'stimulus'
So we’re going to have an economic "stimulus" bill. Looks that way, anyway, after the U.S. Senate voted in favor of one over the weekend. Now they just have to get with the House and decide: stratospherically expensive, or slightly more stratospherically expensive?
Hey, there’s nothing like spending your grandkids’ money on things you could never afford otherwise. Never let a serious crisis go to waste, and all that.
I sense irony. One of the things that brought about the current economic unpleasantness – crisis, if you will – is that people were borrowing money they couldn’t afford to pay back. Banks were lending money the lendees couldn’t pay back.
And now here we go, about to spend hundreds of billions we don’t have when we can’t afford the programs we already have.
We all know the type: the guy who never saves anything, spends it all, keeps the credit cards maxed. Never has “extra” money because every penny is swallowed up by his lifestyle.
And then…bam! He wins the lottery. Not a mega-million dollar jackpot, just…let’s say half a million.
Not only will he not reform his misguided ways, now he'll get even worse. He’ll pay off the credit cards. Let’s give him that much. And he’ll buy the car, and the entertainment system, and the 84” plasma TV that comes with its own satellite and his choice of football announcers.
And he’ll buy the house. Big down payment. Furnishings. A little work, maybe, some redecorating.
A year later, the money’s gone. The mortgage payment isn’t. Neither are the other debts he began to accrue as his winnings dwindled. He’s got a choice now: incur evenmore debt, or reduce his lifestyle to something more affordable.
Ha! I crack myself up. That’s no choice. Warm up the credit cards!
Another year later, and even those are used up. No more credit. No more money. And he’s already missed one mortgage payment.
So: did the one-time money help him? Or hurt him?
Neither, really: his own decisions hurt him. And the federal "stimulus" will do the same to our state budget…unless we make better decisions. The “stimulus” is a one-time deal, like a winning lottery ticket. If we use it to prop up and even expand our regular spending habits, it will make things that much worse the next time around.
It doesn’t have to be that way. I'm sure there are other ideas out there on how to use it correctly, but here are mine:
- First, no money for operating budgets. Zero. Zilch. Nada. Nothing. Any department that can’t support its budget on the money they’re already getting…tough. We will not use the lottery ticket to pay the gas bill – we have to pay that with our monthly paycheck.
- Second, if we absolutely must spend the money on something other than a year-long holiday from the corporate income tax, then let it be one-time or very-long-lasting projects. Roads, buildings, other infrastructure. That new nuclear power plant we’ve all had our eyes on. Things that will last for decades. Things for which upkeep and maintenance are already in the budget.
That will even make things a little easier on future budgets, and will have at least a small economic effect – the construction companies, at least, will have more temporary business.
Of course, the really responsible thing would be for the Feds to “stimulate” the economy some other way. Some way that doesn’t require all those zeroes in new debt. Some way that helps the federal budget into line with federal revenues.
But, again, ha! I crack myself up.
Lance Burri is a contributor to the Badger Blog Alliance
COMMENTS
THE STIMULUS EXPALAINED< SHORT VERSION:
Are you short of money? Spend more.
Are you deep in debt? Borrow more, a lot more.
Still insufficient funds? Counterfeit as much as you need.
Surely as a personal "stimulus," most who read this should recognize my prescription as the height of folly. So why is it that what is foolish on a personal level constitutes great wisdom when governments behave similarly?
Like the fellow in Lance's parable, we are in for a world of hurt, as the "stimulus" spreads not wealth, but poverty, in part, by rewarding foolish behavior.
Ken Van Doren (Tue Feb 10 09:13:57 2009)
Right on!!! Has anyone noticed the hypocrisy of Congressmen blaming the irresponsibility of the car manufacturers? All these years, Congress has been abominably irresponsible with OUR money! And they are about to do it again, and again, and again.
Eventually, the US will be known throughout the world for being as bankrupt as it has, in fact, been "secretly" for quite some time.
We do not need a New New Deal...the last one resulted in double-digit unemployment lasting throughout the 1930s. By 1935, the US had to import 35 million bushels of corn, 13 million bushels of wheat, and 36 million bushels of cotton...because farmers were being paid NOT to grow crops.
By 1939, FDR's Sec. of Treasury said, "We have tried spending money. We are spending more than we have ever spent before and it does not work...We have never made good on our promises...I say after 8 years of this administration we have just as much unemployment as when we started, and enormous debt to boot!"
It was the New Deal that started the practice of corrupt lobbying. And the party in power used payouts to win themselves more votes.
Then-governor of Massachusetts Ely said, "Whatever the justification for relief, the fact remains that the way in which it has been used makes it the greatest political asset on the practical side of party politics ever held by an administration."
Massachusetts refused federal aid, and raised their own money through volunteer efforts, pay cuts, and private charity, whereas Illinois lobbied for, and received $55,443,721 from the federal government--remember, this is 1939 dollars!
And now we have an Illinois senator in the White House. God have mercy on us.
emily matthews (Tue Feb 10 09:31:25 2009)
I too am very afraid of the socialist programs being illegally funded by the so-called "stimulus." This is not so much about adjusting upward the finacial position of America (which it won't do) as it is about buying many, many social programs that can't stand the light of public scrutiny. Thus the urgency on the part of the President to pass the bill before next month when, according to Speaker Pelosi, we lose another 500 million jobs (yeah, right).
If our goal was to light our economy on fire in as short a period of time as possible we'd be looking to do two things: Put cash into the hands of everyone who currently pays taxes, and hand-over to banks the unencumbered means by which to fund major purchases.
The Congress, instead of looking to fund ACORN and national health insurance (two losers if I ever saw any), should be legislating a tax holiday from April through June. During that time there should be setup "tax escrow accounts" at local banks that would hold, at interest, all federal tax fund withholding. The banks would be free to use those funds until the end of the tax year, at which time the exact amount of the account holder's taxes would be remitted to the IRS.
I'm thinking the influx of cash from the paychecks of working people would cause a minor financial explosion to get the economy underway, and the prudent use (that's as opposed to uses specified by the likes of Cong. Barney Fraud and his ilk) of enormous amounts of tax withholding in lending would send the car/home loan business steaming down the road for many years.
I suggest fixing the economy is not the primary motive of those moving heaven and earth to get this stimulus train-wreck passed into law. Thus I also propose we change our national motto from, "In God We Trust," to "God Help Us."
Duke (Tue Feb 10 10:14:51 2009)
The question is how can we survive the Jumbo Jet, flying without engines, that the Bush administration bequeathed on this country before parachuting into the sunset?
I may be a little bitter because this plane crash has personally cost me a small fortune. Being a good capitalist I had a fair amount of money invested in stocks and bonds.
Stocks like Harley Davidson (stock symbol: HOG. Don't you love it?) This stock reached a high of $70 a share after I bought it. Now it's down to $13.99, thanks to the Bush administration's mishandling of the economy.
We need a pilot who can ditch this Jumbo Jet safely and let us escape with our financial lives. I hope Barack Obama can do that. We don't need a bunch of people who flunked out of flight school grabbing for the controls and telling us they have a better idea.
Yeah, right. They're like the Saudi terrorists, only interested in learning how to take off, not interested in learning how to land.
Rich Eggleston (Tue Feb 10 10:48:41 2009)
I too have investments in securities (seems like an odd name in this period of our economy). In fact, I've held shares in Harley since I was in junior high school. If they can survive AMF they can survive BHO. I just grabbed 300 more HOG a couple months ago for 13.80 (sorry). Don't dump it - it'll go back up, and so far they're still paying dividends.
Pres. Bush, by the way, couldn't do the kind of damage to the economy we're seeing all by himself. All he could do was veto egregious legislation when he thought he could do it without being overridden. The heavy lifting was all done by Congress.
As for flying the 747, I'm not willing to watch the Air National Guard pilot leave the cockpit, and then hold the door for the terrorists.
Duke (Tue Feb 10 11:22:09 2009)
***We need a pilot who can ditch this Jumbo Jet safely and let us escape with our financial lives. I hope Barack Obama can do that.***
There's nothing like depending on a parachute with a big rip in it. This country has been spent and governed into the position we find ourselves. So I suppose more spending and governance will get us back out? Not on your tintype! Filling the "stimulus" full of paybacks and pork is going to put us on the right road to economic prosperity? Obama is a Chicago politician. They're not known for much more than dirty politics, corruption and raising taxes.
This mess started as far back as J. Carter who started CRA. This was the beginning of subprime lending. It went along with not much attention until W. Clinton kicked it into high gear. In the name of diversity Freddie and Fannie were urged, no told, they had to even out their system of loans so minorities would be better represented. G. Bush did urge more controls over the CRA but B. Frank and C. Dodd were right there to tell one and all Fannie and Freddie were just fine and there was no problem. Even J. McCain made a big speech that Fannie & Freddie had to be better overseen. Same answers from Frank and Dodd.
Now you're trying to put this whole thing on Bush? Sorry, that simply won't fly!
C.R. Stevenson (Tue Feb 10 13:17:32 2009)
Don't worry about all that money being spent on the stimulus. Sasha & Maleah will figure out how to pay it off.
After all - why try to fix a problem when we can pass it off to our kids?
"Lance Burri for U.S. Senate"
Jeff Riedl (Wed Feb 11 06:12:37 2009)
"Burri for US Senate" HOw about it Lance? I am in. Is it Kohl who is next up? His support for the banksters' bailout may be his undoing.
Ken Van Doren (Wed Feb 11 21:57:55 2009)
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