Economic Stimulus

If I have one problem with the proposed economic stimulus package being debated, it is because there is too little actual stimulus involved. Instead, it is a collection of government projects being cast as economic stimulus. I'm not going to argue for or against whether these need to be done; rather, that they aren't going to do what they are being touted as.

Here is a select breakdown of spending, according to foxnews.com (I'll use the Senate version), and my inexpert analysis:


$47 Billion in increasing unemployment benefits- the problem with welfare is that it discourages work when it is handled irresponsibly. I saw this during my time in South America. Most of the people I met were unemployed and not looking for work. The beginning of the month was marked by lines outside the banks that dwarfed Disneyland's: people waiting for their unemployment checks. This money would be better spent creating new jobs, like tax credits for new businesses, instead of expanding an already ineffecient system.

$17 Billion to give $300, one time payments to social security recipients. This one kind of makes sense in my mind. When you give people money, they generally spend it very quickly. This would increase the economy very briefly. However, it won't solve our problems on any way, since it is only a one-time payment.

$46 Billion in infrastructure projects. Building roads and bridges will not improve the economy. I'm not saying it doesn't need to be done, but it won't provide any significant improvement in the economy. The one part that I think will work is on improving energy grids to prevent waste; more efficiency is usually cheaper. Spending money on cleaner energy would create jobs in research and development and result in defrayed costs in the future. However, a separate $13 Billion is proposed on this, already.

$5.5 Billion on homeland security, mostly on new screening equipment. Again, not arguing whether it is needed or not (I think it is), but screening equipment won't improve the economy. More jobs would be better.

$4 Billion to law enforcement to hire new officers. This makes sense: more jobs which result in less loss and accidents. Theft and accidents cost billions annually. Reducing these costs makes sense, since businesses are the ones hurting the most.

$142 Billion to reduce taxes. This will help. Workers will see about $20 a month in fewer taxes. Since people usually spend this money, it will give a bump in spending, which will increase business.

$19.5 Billion in tax refunds for money-losing companies (eg. those that post losses for five consecutive years). I hate to seem cold, but if businesses aren't making enough money to survive, should we be propping them up? If people aren't ever buying from them, there is probably a reason why. Use this money to start new businesses.

22.8 Billion to subsidize bonds for school construction, teacher training, and structural improvements. Good idea: more schools means more teachers and support staff. More jobs=good.


My main point is that there is too much "government project" in this bill, and not enough actual stimulus. Very little in here will create permanent jobs or help businesses. In order to help the economy, they need to pump money into the economy; not simply make infrustructure improvements or buy equipment. We need to support businesses that cater to individuals and other businesses, since they will be a more permanent buying force. Businesses that cater to the government won't benefit the economy in the long run.