Well, the biggest single spending bill in US history seems to have passed. Counting debt service, we're looking at $1.2 trillion. I read somewhere that you could have spent a million bucks per day since Jesus was born and still not have reached that number by now. The big question remains--will it actually stimulate the economy?
Some of it probably will. The Keynesian model of deficit spending as economic pump-priming does have some merit. Sadly, most of the spending is pegged to happen out in the future, by which time the recession we're in may be over naturally anyway. Indeed, consumer spending was up just a hair in January (not that it can't drop again). As a guy who more favors the supply-side model of economics, I was hoping for stimulative effects from the tax cuts in the bill, but the final draft comes out to only about $13 a week in tax relief for the average family (dropping to $8 in January).
Some have said in the past that the Bush Administration used the genuine crisis of 9/11 to push through the Patriot Act, enacting a grab-bag of neocon wishes using fear as an engine to get it through. I see this bill as the reverse--getting almost every liberal dream since LBJ passed so fast that there's no time to even read the whole bill while taking advantage of the fear factor of the current economy. The big differences were that the Patriot Act was passed with truly bipartisan support (300+ votes in the house, 98-1 in the senate) and included sunset provisions that had to be revisited in 5 years. This one was passed without a single genuine Republican vote (Collins, Snowe, and Specter in the senate are statistical outliers), and the effects will be with us forever. One thing you can be sure of--once government spending goes up, it never comes back down. This spending will form the new "baseline" for budget scoring from here on out. We're looking at enormous deficits as far as the eye can see.
Now, I've heard the argument that conservatives have no room to talk about deficits, as Reagan was the first president to run up a huge one, and George W. Bush similarly increased the deficit. Thrown in there for good measure is the fact that in between them, Bill Clinton actually ran a surplus. Let's examine these points.
First, Reagan DID run a huge deficit. We'll leave aside discussions of shared responsibilty for spending with the congress (Tip O'Neill and the Democrat-controlled house didn't much like budget cuts, either) and just posit that all the fault lies at the feet of Reagan's huge spending increase on the military. Fine. How did that come out? No Berlin Wall, no USSR, no Cold War. If you had offered any sane observer the option of winning the Cold War on credit in the mid 1980's we'd have taken it. Any of my older readers remember the 1987 movie The Day After? How about 1983's Wargames? Maybe Red Dawn? Rocky IV? Sting's 1986 single I Hope The Russians Love Their Children, Too? My childhood was consumed with legitimate fears of nuclear annhilation. My kids think that's ancient history. Considering the trade-off, I won't criticize the Reagan deficits.
Then there's Clinton. Again, it's true that the budget ran a surplus for a short time when he was in office. Was it because he was so fiscally responsible? Not really. After 1994 the Gingrich Republicans in the house held his feet to the fire in terms of responsibility, but even that didn't do it. Clinton had the unique opportunity to slash the defense budget after the Cold War ended (The "Peace Dividend"). Little did we know we would have use for a military again pretty soon. He also managed to preside over the birth of the internet and the dot-com boom. It's simple math--revenue up + spending down = balanced budget. Whether or not Clinton personally deserves the credit, those look like good days.
Then comes Bush. The question facing him is what to do with the surplus. By definition, if the federal government is bringing in more than they spend, that means people are paying more than they need to in taxes. He makes the call to return the stimulus to the taxpayers as a tax cut. At the time, I agreed with that philosophically. And I have much enjoyed the extra cash in my pocket. BUT... we didn't foresee the bursting of the dot-com bubble or 9/11 and the resulting increases in spending. Looking back with 20/20 hindsight, I'd have rather that "extra" revenue gone toward a national "Dave Ramsey Rainy Day Fund." And face it: "compassionate conservative" Bush was no fiscal hawk. No Child Left Behind, Medicare Part D... he spent way too much. And yes, the Republicans in congress went along with it. This has damaged their standing to criticize now.
But here's the thing--if Bush was wrong to spend so much, and that's part of the problem, then how is the solution to do much more of the same? Or, conversely, if deficit spending is such a good idea for stimulus, then wasn't Bush doing a GOOD thing? You can't have it both ways.
OK. Back to now. I think the stimulus package is a crap sandwich. But that's the breaks. Obama and the democrats won, they've got the votes, and they get to lead. And I'm not convinced that if McCain had won that we'd be seeing any better. I can imagine a fantasyland where Mitt Romney had somehow won the GOP nomination and become president and the terms of the debate were much different (even though I didn't support Romney back in the primaries). But old Mr. "Bipartisan Maverick" likely would have embraced a similarly bad bill in his never-ending quest to reach across the aisle, and then the GOP would have had to go along or buck their own president.
So what to do? Nothing different. Pay down debt. Spend less that you make. Save. Give. Work as hard and as effectively as you can, which is the best recipe for job security. Whining doesn't help. Pray for our country.