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Stimulus Madness: The Inheritance Of Insolvency

February 19th, 2009 Comments off
A one-year anniversary passed days ago, without any fanfare. The Economic Stimulus Act of 2008 was enacted into law after its passage by Congress, on February 13, 2008. How soon we forget.
With the first inklings that the “strong fundamentals” of the American economy may have been somewhat unhinged by the sub-prime meltdown, the Republican and Democratic political establishment, joined by the Federal Reserve and Treasury Department, happily approved an extra dose of borrowing added to an already deficit-ridden federal budget. The sum of $152 billion would be borrowed from the children and grandchildren of America, and in a reverse form of inheritance, sent in the form of tax rebate checks to the current adults of the United States. The hope was that American consumers would dash off to the shopping malls as soon as they opened the envelopes with the U.S. government checks enclosed.

In retrospect, this so-called “economic stimulus” was sheer political gimmickry. As we now know, it did nothing to enhance the American economy, while almost doubling the projected deficit. Yet, we were all assured by President Bush’s press secretary that we absolutely had to borrow this money from our descendants, so as to ensure we left them a “strong economy.” No wonder our memories are so short, as we pass the one-year anniversary of this $152 billion boondoggle without a microsecond’s worth of notice.

Since that first stimulus, we have been through the implosion of the U.S. economy, the onset of the Global Economic Crisis, followed by the near collapse of the world’s financial system. This was followed by another deficit-driven expenditure, supposedly necessary to rescue the American economy; the $700 billion TARP program to prop up the nation’s insolvent, ineptly managed banks and financial institutions. Not to be outdone, TARP is now eclipsed by the $787 billion “American Economic Recovery Plan,” the gargantuan stimulus package enacted by the new Obama administration. Yet, this is not the end. It may only be the beginning of stimulus madness.

President Obama has already indicated he may be back for another stimulus program. Some economists have suggested that in a year’s time we may see a $2 trillion stimulus plan. In addition, TARP has been proven to be ineffective in facilitating a rescue of the largely insolvent banking sector of the United States.

President Obama and his team have paid lip service to the need to return to “fiscal discipline” once the economic crisis is in the past. Several optimists in the political establishment have even suggested that the U.S. budget will be balanced by 2012. Don’t believe it; we have all been down this economic make-believe road before.

Beginning with The Economic Stimulus Act of 2008, the U.S. political and financial elites have embarked on the most catastrophic addiction with debt in the entire history of human civilization. Despite the pompous rationalizations that are offered for the leveraging of America’s finances to an extent that is unsustainable, there is no rational elaboration that can be offered for this insane and inane fiscal policy. Rather than cure the U.S. and global economic crisis, these stimulus fantasies are only assured of one outcome: we will leave for our children and their children the inheritance of insolvency.

 

 

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