The Congressional Budget Office says Obama’s stimulus package will do more harm than good over the long-term, reports the Washington Times.
Note that the CBO says that “so much government debt [would accumulate] that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.”
Placing the national government in direct competition with private enterprise could do immense damage to the economy; who knew?!
The Times’ report accompanies Obama’s increasingly trill rhetoric targeted at Republicans and fiscally conservative Democrats who have expressed skepticism about the bill.
College students and young professionals are likely worried about their job prospects for the next couple years, but they should be more wary about the staggering national debt they may need to pay down in the years to come.
Some have argued that, with GDP figures falling at the rate that they are, government expenditure is a necessary stimulus for creating economic activity and enabling consumer consumption. With this logic, any stimulus (even if you’re paying someone to dig holes and fill them back up with dirt again, as my economics professor always points out, it’s a stimulus) is a good stimulus. But, as this article points out, short term stimulus (in the form of 800-900 billion) will have long term recessionary implications. It’s also important to point out that this stimulus will lead to a huge increase in the money supply; should we emerge from the recession in the next year or two the government would have to act quickly to reduce the money supply (taxes, perhaps?) or face high inflation rates.
hello dropping by to say hi and hope u click back to me 🙂
In many ways economic upturns and downturns are all just smoke and mirrors. What is needed now is a global mood of trust and optimism, not skepticism and pessimism. Too many isms there!
The U.S. government pumping $900 billion into the economy could potentially do a lot for domestic consumer confidence and global confidence, but I’m skeptical that the confidence we may gain will outweigh the costs (actual + future growth) that we will definitely incur.
I’m just excited for the new Young Jeezy song as he tries to bring his political views more toward the center… “My Stimulus is Whack”
Ollie, that was a very “me”comment. I appreciate it. At any rate, I agree that such a huge stimulus is too much of a risk in the long term. I believe the government can more constructively increase consumer confidence in the form of tax breaks. This way, as people get their paychecks, they will see that they have more money to spend. Usually, when this happens enough times, they will spend it. The only issue with that method is the issue of time. It may take a while to regenerate consumer confidence in that way, and how much time do we have before the economic conditions become more dire? I’m afraid that’s a question I cannot answer.