Saturday, February 14, 2009

The Rescue-Bailout-Stimulus Plan

As ridiculous as my article title sounds, CNN's Saturday evening headline was "Stimulus bill limits bailed-out execs' earnings." It seems that they don't mind crossing the wires of public perception. (Image: Newsday) Republican commentators call the bill a "bailout" while Democratic pundits call it "stimulus" or "rescue" package. Both talk about a financial crisis; the Republican position is that the bill will cause it, while to the Democrats say that it will prevent it.

I won't pretend to be an economist who understands the ins and outs of the financial situation we are in now. In all honesty, I doubt there are more than a handful of economists who understand what is happening enough to know how to fix it. Instead, I'm discussing this bill in terms of common sense and as a critique of the current U.S. government.

Common sense would dictate that it will benefit the economy to have more money flowing with less restraint through the system. The Republican philosophy on this is that it can be accomplished by leaving more money in everyone's pocket by cutting taxes. The Democratic philosophy is to spend on projects that create work.

Both systems have flaws, but, as I'm sure most of you guessed, I would lean towards the spending approach because it is guaranteed. You pay into a project and it creates jobs for the unemployed. Cutting taxes is not guaranteed to change anything because people may simply sit on the money. That aside, I'm more concerned about the general situation of how the government is operating.

I'm not going to criticize the executive branch because President Obama and his staff have very little sway at this point. He may be a bit behind the Republicans in the media war over the issue, but he's stayed on course with what he said during his campaign. The legislative branch is the real disappointment in this situation.

Thus far, no Republicans in the House of Representatives have voted in favour of the stimulus during both votes. This is in spite of numerous changes made by the Democrats, such as removing lots of spending that wouldn't simulate the economy and adding more tax cuts. This clearly didn't sway a single Republican to see the need for a stimulus.

Though the leader of Republican house thinks it's appropriate to dismiss a vote because the latest draft was compiled in a hurry after already stating his intentions to do so regardless of content, that attitude is the opposite of what we need. Though he says no one has read the bill, it is practically the same bill presented the week earlier with most of his previous complaints trimmed off. That said, I agree with his sentiment that people should know what they're voting for.

The problem is that this man, John Boehner, does not care whether the stimulus is good or bad. He would vote against the bill even if it included and spending instead of tax reduction. I also am annoyed by this man's charade because he complains of partisanship when the Democrats already gave into Republican pressure. I might even let him off the hook if that was all the hypocrisy, but not when combined with the fact that not one Republican in the house voted yes while several Democrats acted with freedom to vote no.

The bill has been sliced and diced down to a lean package, relatively speaking. Some top economists think that the bill was too small to begin with, and now the bill may become even smaller to appease Republicans into breaking the line. Ultimately, I believe the government needs more top economists working on this bill and less politicians who are using their votes as bets on issues to run on in the next election cycle. That's wishful thinking though, the chance of most law-makers seeking expert advice is next to none.