Bailout Mania

At a gathering in Las Vegas on May 27th marking the first 100 days passed since the signing of the American Recovery and Reinvestment Act (ARRA), better known as the “stimulus” bill, President Obama stated,

“One hundred days ago, in the midst of the worst economic crisis in half a century, we passed the most sweeping economic recovery act in history – a plan designed to save jobs, create new ones, and put money in people’s pockets.  Now, one hundred days later, we are meeting our economic challenges head-on and beginning to see early signs of progress across the country.”

He went on, claiming that

“Across the country, the Recovery Act is already at work, providing essential financial relief for American families and businesses, creating and saving jobs, and spurring technology and infrastructure investments that will lay the groundwork for the new economy – and work is just getting started.”

It all sounds so good, doesn’t it? Who couldn’t love an activist government at work—solving all of the ills that face us? Everybody, I suppose—except for those unlucky enough to get stuck with the bill… which is every productive member of society—present AND future. You. Me. Our kids. The grandchildren. Long after the goodness of spending money we don’t have, the reality of paying for it all will live on.

Now, I know that there is a certain amount of “stimulus” money floating around that is paying for some long-needed infrastructure projects—ones which SHOULD have been self-funded through the gasoline-tax funded trust, had it not been raided for other purposes (rail, sidewalks, museums, etc)– but that’s not the lion’s share, and not necessarily all that good given the consequences long term. All of this money must come from somewhere—even that which the government prints. Ultimately, it is “paid for” with money in only two ways: direct taxation or, more insidious, inflation. The drag that both place on the economy is not worth it, in my mind, to attempt to correct a normal cycle of business, and a contraction from too much credit freely given. To use an old cliché, the cure will be worse than the disease. When you have an economy reeling from the correction/credit contraction, there is less money to be used to buy things, and the business cycle must adjust accordingly to compensate. To take even more money out of it via taxation and/or inflation simply makes a bad situation worse, compounded multiple times over with interest on the debt incurred in the process.

Let’s take a look at a wee slice of “stimulus” close to home: the so-called “JAG” grant worth $217,578 that could be coming into Belknap County law enforcement agencies. Before I get into the details, please note that the JAG documentation says the following:

“The stated purposes of the Recovery Act are: to preserve and create jobs and promote economic recovery; to assist those most impacted by the recession; to provide investments needed to increase economic efficiency by spurring technological advances in science and health; to invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and to stabilize State and local government budgets, on order to minimize and avoid reductions in essential services and counterproductive State and local tax increases.”

Keep all this in mind as you read on…

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Shining light into the dark corners of "stimulus"

Lately, it seems like everyone I know is lamenting the ongoing "stimulus" and "bailout" plans, concerned what the impact will be on the future. Will the present actions of government make things worse? Even some supporters of Obama are taking issue with the approach taken. Consider this little tidbit from Kevin Landrigan in today’s Nashua Telegraph as he previews a new study to be unveiled tomorrow that seeks to track and measure "stimulus" as it works its way through New Hampshire’s economic bloodstream:

A former Barack Obama supporter turned federal-stimulus-bill opponent will ramp up his campaign with a new executive director and 24-page report on the New Hampshire impact from the Washington largesse.

In February, Fred Tausch, 37, of Nashua, bankrolled $100,000 in ads to promote his effort known as Stimulating The Economy Without Accumulating Record Debt and created a STEWARD Web site, www.stewardofprosperity.org/meet/STEWARDS, to report on where the stimulus money is going in the state.

His staff hire for the expanded effort is Erin Abell, who started on John McCain’s 2008 presidential campaign team the last six weeks before the first-in-the nation primary vote.

[snip]

On Monday, the group will release results of an economic analysis study done by Brian Gottlob, who has his own Seacoast consulting business and produces an ongoing report on economic trends.

In the report, Gottlob identified more than $920 million in stimulus money already headed to New Hampshire.

Landrigan quotes from the study:

"These funds will not increase aggregate demand or stimulate job creation but they may preclude some job losses in state and local government.”

Phew! I know I’ll sleep better tonight! All kidding aside, I will be eagerly waiting to read this, and will be further watching this rather interesting group of "STEWARDS", as I am in full agreement with this as found on the "About Fred" page of their website:

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