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Wednesday, March 4, 2009

Frederick Co. MD "Up and Coming" Democrats

Spencer Knoll Bio

Is Stimulus Bill a Mistake?

"The President's $800 billion stimulus package" may be a misnomer. "Congress's $800 billion mistake" may be slightly more accurate. President Obama had a clear, sensible, moderate plan for stimulating the economy that was pork-free and targeted at the sectors with the most potential to grow and provide stimulus. But instead of taking control of his plan's destiny, the President handed it off to Congress, who ripped it to shreds and ensured that it will have few positive results.

Included in the behemoth bill are the "buy American" provisions which the President explicitly opposed. These provisions will serve only to drive up the cost of infrastructure projects provided for by the act and alienate America's trading partners.

Furthermore, the tax cuts touted by the Republicans, while important, will be mostly ineffective. $237 billion out of the $288 billion of cuts are directed at individuals. While a tax break is nice, given the current state of consumer confidence that money will go directly into savings and provide little to no actual stimulus, whereas tax cuts for small businesses can help offset costs and stimulate job growth.

Of course, spending is also necessary for real stimulus, but in this case Congress got it wrong as well. Infrastructure investment, which can put people to work right now, accounts for only $80.9 billion – a pittance compared to the total value of the bill. Infrastructure spending can help stimulate nearly every sector of the economy; it can trigger spending by heavy equipment manufacturers, automakers, engineering firms, steel producers, and many other sectors by increasing demand for their products.

The jobs created by this spending extend beyond just the workers on the job site, as every business that sees increased demand from infrastructure projects will need to hire workers to meet that demand. Infrastructure spending has the most potential to put the most people to work at every income and skill level while simultaneously improving America's failing roads, bridges, and railways.

Given our country's current economic predicament, a massive influx of government spending and tax cut dollars was certainly warranted. In this case, however, the stimulus was rushed through a legislature that is paralyzed by Speaker of the House Nancy Pelosi (D-Calf.) who is unwilling to compromise and an angry opposition that is still getting used to being in the minority.

The result was a bill that will serve more to drum up the opposition and give the Republicans a rallying point in 2010 and 2012 than it will to stimulate the economy. I would say that President Obama should have vetoed the bill and sent it back to Congress, threatening the veto until they produced a sensible final product. It seems that not even a powerful veto from a popular President would have been enough to smack some sense into the folks on Capitol Hill.


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