Obama's Stimulus Plan Gets a Reality Check
01/12/2009 10:58 am EST
It’s encouraging to have President-elect Barack Obama exuding confidence, hope, and promise. So, I hate to throw cold water on all those high expectations. But, really, what are the odds that President Obama will get a “reasonable” stimulus package through this Congress in a “reasonable” amount of time, and at a “reasonable” price tag?
And, yes, it all depends on how you define “reasonable”—a difficult task when all our financial measures have gone far beyond reason. For example, who would ever have thought a Congressional Budget Office estimate of a $1.2 trillion deficit for one year would seem reasonable? And that’s before the stimulus package is debated!
And who would have thought that a zero percent federal funds rate, or a zero Treasury bill rate was reasonable? And who would have thought that the Federal Reserve buying commercial paper or mortgage backed securities was reasonable?
So let’s adjust our sights, our measurements in terms of the new reality. And still, can we reasonably expect Congress to do anything that will help, not further hurt, the economy?
I, for one, doubt it!
Even amidst “a crisis unlike any we have seen in our lifetime,” and President-elect Obama’s pleas for quick passage, Congressional Democrats are pushing to debate ad nauseum the details of the stimulus plan. After all, a lot of money is going to be distributed—and it’s their job to get it for their states. And Republicans are belatedly starting to worry about piling on debt!"
And so, the process begins.
Yes, there will be debate over whether tax cuts, investment tax credits, infrastructure spending, or credits for low-income wage earners are the correct approach. And the proposal is bound to include a mixture of each. But the balance is not the issue. They’ll be fighting over the spoils, the “what’s in it for me” more than the principles of the approach.
Good thing there’s a deadline for all this mess. Yes, Congress has to have its recess on February 13th to get home for the President’s Day holiday weekend. I doubt they’ll give our new President a deal in advance of their departure—or a Valentine, for that matter.
It may look like a love-fest at the inauguration, but by the time we get to that lover’s holiday, all hearts and hopes will be broken. Don’t you think?
And by the way, is that the worst thing that could happen: Congress failing to get something done?
What do you think? Please have your say now.