Stimulating the Economy

I have been thinking about commenting on the efforts on Capitol Hill to pass a bill to stimulate the economy. There are enough ideas out there. Of course we have the recently passed HR1, from the US House of Representatives, the Stimulus Bill. All 647 double spaced pages can be read here. As a side issue, what do you, gentle reader, believe is the percentage of Congressmen who have read this bill, even skimmed it?

The Director of the Congressional Budget Office (CBO), blogged about it on Friday. Here he talks about testifying before Congress this last week.

Then there is the Rush Limbaugh/Barak Obama Plan, as Mr Limbaugh calls his proposal, developed in response to the President singling him out as an obstacle to progress.

The comment of a local Economist was interesting, and represents the Calvin Coolidge view of things. Roughly what he said was that the best thing Washington could do for the economy would be to take a long vacation and let the Federal Reserve try to fix the current problem--followed by a comment on the need for consumers to stop spending and start saving. Ah, there is the trick. Real recovery needs savings, which are invested by private and publicly help firms, creating jobs.

Today comes The Lowell Sun with an OpEd by Editor Jim Campanini. Mr Campanini covers a lot of ground in a short period of time. First off he is worried that the stimulus is not creating "new, dynamic jos for America." (Does that go back to the Econ Prof and investment?) Mr Campanini praises construction jobs for improving our infrastructure (and it does need improvement), but notes that when those jobs end, then end. He mentions job re-training, but asks about what it is for and suggests flipping burgers.

Mr Campanini points out that the Federal Government needs "to restructure America's job foundation." I agree with that. To say this is not to call for socialism. Each and every tax law in some way restructures America's economy, encouraging this and discouraging that. I need to learn a lot more about economics, but at this point I do not believe there is such a thing as a "neutral tax."

John Maynard Keynes and his followers said that when there is a recession we need to stimulate the economy. His thinking was that consumption drove the economy. A Time Magazine article in 1965 said: "Washington's economic managers scaled these heights by their adherence to Keynes's central theme: the modern capitalist economy does not automatically work at top efficiency, but can be raised to that level by the intervention and influence of the government."

WARNING: "Two nations separated by a common language." Keynes was British. To him a liberal is one who believes in free markets.

So, this is a blog and I should have an opinion. Frankly, I don't know enough to have an opinion. I do believe, however, that most of those voting in Congress on the $800 billion plus stimulus bill know little more than I. So, I will venture forth the opinion that we need some stimulus, a la Keynes, but we really need to be structuring our taxes and our laws so that we encourage investment and also lending by banks to those who will create jobs--new, dynamic, innovative, export market jobs. Today's Boston Globe suggests that with regard to lending, we are going in the opposite direction. Hat tip to my wife for that article.

Regards  --  Cliff

PS:  Buy today's Sun. There is an interesting letter to the Editor on GITMO.