Just prior to the Senate's decision today to move forward on a $780 billion stimulus package, The Wall Street Journal featured a wonderful opinion piece by by George Melloan that takes the time to look at the consequences of adding even more government spending. The idea that all government spending will always translate into economic stimulus in not just naive, it's downright stupid. This piece looks at the potential long-term consequences of the stimulus package, most notably either the unlikely increasing of tax rates, a seemingly ugly inflationary picture, and/or a weaker dollar stemming from low interest rates (and high inflation).
But perhaps the stimulus packages is somewhat necessary. Maybe there are components that will help grow the US economy and our standard of living in the long run. However, the stimulus appears to be filled with even more pork-barrel spending than typical legislation.
Is the stimulus package perfect? No legislation ever is.
Is the stimulus package necessary? In some form, sure, it might help.
Is this the type of stimulus our economy needs right now? Probably not.
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