The American Recovery and Reinvestment Act, better known as The Stimulus Package, is a step in the right direction, but it is not a bold, comprehensive plan to stimulate our economy across-the-board. We can do better. We need to do better.Americans want bold and decisive action. Living in fear is what people in other countries do. President Theodore Roosevelt captured our collective spirit when he said, “Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure… than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.”
When President Obama signed the stimulus package into law, the stock market fell three hundred points. That cold reaction is what the plan has been receiving since the collection of ideas surfaced. Only politicians have offered a strong endorsement of it, and clear evidence of its flaws is that it passed without hearings, at lightning speed before it could even be read.It has failed to boost consumer or investor confidence.
Without confidence, people stop spending, and more workers lose their jobs. Our dismal employment numbers tell the statistical story, but not the human impact.
Every person who isn’t working represents an unused talent, and people who aren’t working can’t possibly help to lift the country out of recession and toward a better standard of living. Working people create wealth and pay taxes, so putting people to work in the private sector is the best solution to another Depression.Business creates real jobs, not the government. And the bottom line is that a Depression has already started according to the International Monetary Fund.
Strong consumer confidence is a vital to our economy. People have to believe that they’ll still have their jobs tomorrow, or they won’t buy cars today and they won’t go on vacations tomorrow. And that’s what we’re seeing now.
American consumers are curling up into the fetal position and hiding from the world. They’re scared and hoarding, in fear of a worse tomorrow when the Dow Jones drops to 6,000, instead of believing the glass is half-full and that by defining our problems we are half-way towards solving them.
Something our government has not asked Americans is what would boost their confidence in the economy and their confidence in our government.
A business in that situation would conduct market research and focus groups, but senior house leadership simply put together a package that met their political dreams, which had been placed on hold by Republicans for eight years.
If Congress would ask Americans what they’d like to see from the government, one certain answer is better oversight of the Federal Reserve Bank and the financial institutions that have been responsible for the deterioration of our economy with liar’s loans and CDOs. With strong oversight, the SEC could have prevented, or greatly reduced, the problems with sub-prime mortgages, Madoff, Stanford, and others that have yet to surface.
The only effective way to stimulate the economy is to create demand for products and services, and one step that the government can take to help businesses is to make it easier for them to buy new products. If the federal government would implement a 100% write-off for all capital goods purchased in 2009, the economy would boom as businesses would rush out to buy trucks, power washers, paving machines for all those highway projects, and new rail to improve the nation’s train system.
This bold and simple step that I first proposed in December 2008 can bring a huge boost to the economy. The 100% write-off does not appear in the stimulus package, but that doesn’t mean that it can’t happen. Its effects would be powerful and swift, which is what the economy needs. Email the President and send the same message to your senators and your representatives in Congress.
The stimulus law package that is now law will have benefits. The trouble is that they will take a time to show up. The early rhetoric spoke of “shovel ready” projects, but even those will take a long time to work through the economy. To use a sports analogy, this plan is sending a marathon runner when the economy needs a sprinter to deliver jobs within the hour, not within a year or two.
The best part of this stimulus package is the money that it provides for improvements in infrastructure. That’s good because our roads, bridges, power grids, and water systems are in bad shape. The American Society of Civil Engineers recently gave the nation’s overall infrastructure a grade of D, and we can’t maintain the world’s biggest economy with failing roads, bridges, and water systems. Still, the plan’s spending for infrastructure is just a tiny part of what the country needs.
And, maintaining our infrastructure is something that government must do. So doing something that’s already the government’s responsibility hardly qualifies as a stimulus.
The time lag is not the only problem.
A bigger problem is that the package perpetuates the myth that government can create wealth.
Government can make jobs, but government jobs don’t go forth and multiply. Government jobs don’t create new products and services.
In the United States we do things that other countries fear to attempt. As Sinclair Lewis said, “Intellectually, I know that America is no better than any other country; emotionally, I know that she is better than every other country.”
Onward,
Richard Alexander
