Last night, during his State of the Union address, Bush boasted about his $145 billion “economic stimulus plan,” aimed at revitalizing the weak economy. The bipartisan plan calls for tax rebates along with bolstering of welfare programs.
I am all for having money returned to taxpayers, but the federal government doesn’t have any money to return. They are in debt. One of two things will be done to follow through with the promise of rebate checks: It will either be borrowed or printed. Borrowing money will create more debt which will require more interest payments to foreign governments, and inflating the money supply — in ADDITION to the inflation already put into action via interest rate cuts — by printing money will continue to eat away at the value of the dollar. Either way, we are leaving the next administration, our children and future generations, more economic problems. They’ll be left with unimaginable debt, runaway inflation and the threat of the same booms and busts that this silly stimulus plan seeks to repair. I don’t understand how Bush and so many others get away with this nonsense. It doesn’t make any sense, but people see that they’ll be getting a check from the government, so that makes them happy. And Wall Street’s numbers will go up temporarily, calming investors. No one is thinking about the long term.
Walter Williams, as usual, hits the nail on the head:
There are three ways government can get the money for a stimulus package. It can tax, borrow or inflate the currency by printing money. If government taxes to hand out money, one person is stimulated at the expense of another who pays the tax, who is unstimulated and has less money to spend. If government borrows the money, it’s the same story. This time the unstimulated person is the lender who has less money to spend. If government prints money, creditors, and then everyone else, are unstimulated. As my colleague Russell Roberts said in a NPR broadcast, “It’s like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing — the water in the shallow end doesn’t get any deeper.”
This is the only logical plan I’ve seen put forward by a presidential candidate. The key to this plan, that no one else seems able to commit to, is decreased government spending. I realize people want to have their cake and eat it too, but there has to come a point where we admit that is not possible.