Before making up your mind whether the stimulus package in Congress is a good idea, it might be a good idea to check a few facts.
First, according to USA Today the stimulus package will cost $825 billion. Or 825 thousand million. That's a number that's hard for you and I to understand.
Let's try another big number. According to the CIA there are 303,824,640 Americans (July 2008 est.).
If we divide the cost of the stimulus ($825 billion) by the number of Americans (303.8 million) we get a cost per American (every man, woman and child) of $2,715.
For a family of four that would be $10,860 ($2,715 x 4).
Unfortunately, this money isn't just sitting on a shelf waiting to be spend. The government doesn't have it and will need to borrow.
So the U.S. Government is putting my family in debt by $10,860. Sometime in the future the four of us will need to pay that much (plus interest) more in additional taxes. That's certainly something that I wouldn't vote for. So I need a real good reason to agree to that much debt.
The argument made in Washington is that we need to do something quickly to save the economy. But, is this really the best way to go? According to the Congressional Budget Office only about 2/3 of the money will hit the economy in the next 2 fiscal years. Some say that much less will actually make any difference soon. That doesn't seem very immediate to me.
And much of it is going to be wasted and not produce any new jobs or protect any existing jobs. Bailing out the same big shots that got us into this mess. More money for projects favored by the lobbyists and big money interests. More pork. In short, just more business as usual in Washington DC. The kind of business that most of us are very tired of.
On the other hand, what would happen if they just gave you and I the money? We'd spend some and save some. The money we spent would immediately go to create jobs. You could spend that money on many things including job training in case you lose your job.
The money that we save would mean that there's more money available to people who want to borrow to save their homes or build a new factory and hire new workers. All of the money would effect the economy right now. And none of it would go to the special interests that dominate both political parties in Washington. It would go where you knew it does the most good.
I know that many well-intentioned people are for this bill. Their goals (avoiding a depression) are good. But you and I will pay a big price for this stimulus bill. If it works the cost will be $2,700 per person. If it fails we'll probably see a depression that will last years and push unemployment into the high teens. Now is not the time for a snap decision. The stakes are much, much too high.
We'd be wise to consider what happened in the depression of the 1930's. They tried spending government money to create jobs and stimulate the economy. And, if you adjust for inflation and the size of the economy, they actually spent more than is being suggested today. Unfortunately it did not work. Unemployment stayed in the high teens until the late 1930's. In fact, many economists look back at that time and say that the spending actually made things worse.
We face a serious situation. Before we rush into throwing billions of dollars at the problem, we'd be wise to consider alternative plans and to look closely at this plan. We all know that buying a car or house on a 'snap decision' can be very foolish. Many of us have made that mistake (and paid for it for years). Let's not let our elected representatives make a huge mistake by rushing to a solution before we all get a chance to understand that solution. The price could mean unemployment, home foreclosures and more on a scale not seen since the great depression.
Keep on Stretching those Dollars!
Gary
