President Obama's Economic Stimulus package

Republican Politics, American Style
Published on February 19th in Metro Éireann By Charles Laffiteau
I closed last week’s column, about how President Obama has performed during his first weeks in office; by saying I would discuss President Obama’s economic stimulus measures in detail in this week’s column. But as you read this I will be winging my way across the Atlantic Ocean back home to Ireland from a conference in New York City, so some of what I discuss here may have already been rendered obsolete based on whatever actions the US Congress has or hasn’t taken on this very important piece of legislation.
With that caveat I will now discuss what I believe will be the likely outcome of the US Senate debate about the cost of the economic stimulus package, as well as what I believe the US government (and other countries and their governments) will eventually have to do to bring the world economy back from depths it has so quickly sunk to. As a lifelong fiscal conservative I must confess to being aghast at the almost one trillion dollar price tag of the stimulus package. But I’m also aware that the world is confronting the worst economic crisis since the Great Depression of the 1930’s, so extraordinary measures seem to be appropriate under the circumstances.
I am pleased to see Republicans arguing against some of the new federal spending programs that will continue long after the current economic crisis is over. But I must also note that many of these so-called fiscal conservatives’ voices were no where to be heard while former President Bush was running up half a trillion dollar annual budget deficits to finance his spending programs and the Iraq war. Since America wasn’t confronting such an enormous financial crisis during those years, Republican opposition to Obama’s deficit spending plans strikes me as being a bit like “the kettle calling the pot black.”
I am particularly disappointed in Senator John McCain, who has made absolutely no effort to try to forge the kind of compromises he has in the past with Democrats on economic and other issues. Having been soundly defeated by Obama in his bid for the Presidency, it appears John now wants to upstage President Obama and thereby salvage what’s left of his political reputation among his fellow Republicans in the process. John and other Republicans, who seem to have suddenly found their fiscal conservative voices now that they are out of power, are also playing a very dangerous game here.
But fortunately for America and the rest of the world, I don’t believe that McCain and his other so-called fiscally conservative Republican allies will win this particular dust-up with President Obama and the Senate’s Democrats. There are a few much more statesmen like Republicans in the Senate who have decided that now is not the time to be playing these kinds of dangerous political games. This group includes veteran Republican Senators like Arlen Specter of Pennsylvania and George V. Voinovich from economically depressed Ohio, as well as the three female Republican Senators, Lisa Murkowski from Alaska and the two Senators from Maine, Olympia Snow and Susan Collins.
These five Republicans have been working behind closed doors with some moderate Democrats like Ben Nelson of Nebraska, Evan Bayh of Indiana and Colorado’s newly elected Senator Mark Udall, to trim or eliminate some of the new spending programs from the stimulus bill in order to ensure its eventual passage this month. This alliance of moderate Senate Democrats and Republicans is reminiscent of the so-called Gang of 14 Senators, who banded together four years ago to halt attempts by the then Republican controlled Senate to ram Bush’s judicial appointments through the Senate.
Make no mistake, there are many very worthwhile spending programs included in the Congressional Democrats economic stimulus package which have been endorsed and supported by President Obama. But now is not the time and this legislation is not the place to provide additional funding for the Head Start program, prisons, education for the disadvantaged, school improvements, child nutrition and violence against women.
President Obama has wisely avoided getting involved in the negotiations being conducted by Senate moderates about what specific programs should be cut from the stimulus bill. He has instead focused on the urgent need for a substantial package of tax cuts and infrastructure spending to address America’s economic crisis. To that end, President Obama has repeatedly urged members of Congress from both parties to rise above partisan politics and work together on the specifics so that he can sign the new bill into law immediately after it has been approved by both houses of Congress.
While I support most elements of the economic stimulus package and believe that it will be passed and signed into law before the end of February, I don’t think this and similar economic stimulus measures by other countries will resolve the current economic crisis in America or anywhere else in the world. Nor am I alone in my opinions about what additional steps the US and other governments will eventually have to take to get their economies moving again. Some respected economists as well as members of Obama’s economic team have also come to similar conclusions.
The world’s banks won’t be ready or able to start lending money again until the US and other governments’ take ownership of their banks “bad assets” to get them off these banks’ books. Once this has been done, these newly “washed” banks can raise private capital which they’ll be eager to lend to credit worthy businesses and consumers.
Mind you, these “bad assets” our governments will then be stuck with are not actually worthless. But unwinding these “securities”, which are actually packages of debt containing both good and bad mortgage or consumer loans, to figure out which elements have value and which ones don’t will be a long and time consuming process. But the world’s economy is dependent on banks and private investors who can’t afford to wait and find out what these securities are worth. Therefore, our governments must do so.