Published on Wednesday, 30 November -0001 00:00
The U.S. Congress has already made three failed attempts to "fix" the sagging American economy. Now they are coming to the plate (aiming at the taxpayers) with yet another ill conceived, bloated spending package that like their first three whiffs at "stimulating" the economy is likely to fail. Let's review Congress's three previous strikes. Strike One: In order to launch the economy over the fence in Center Field, the mighty U.S. Congress stepped to the plate in April 2008 to pass a $150 billion economic stimulus package consisting primarily of tax rebates, ranging from $300 for individuals up to $1,200 for married couples, plus $300 per child under 17 years of age. This $150 billion tax rebate program (although much of it went to people who don't pay taxes) was framed as being a whopping infusion of cash into the economic troubled waters. The $150 billion disappeared like a pebble on the beach, as most people spent the money to erase existing debt rather than purchasing new cars or electronics, etc. Strike Two: With Congressional approval ratings hovering in the single digits and an election just three months away, the mighty Congress once more strolled to the plate, once again to demonstrate they could energize the American economy. This time it was to "fix" the housing foreclosure problem. Their solution was a tiny $15 billion "bailout" of Fannie Mae and Freddie Mac, two previously unknown federal insured mortgage lenders. The Washington elite missed this one like a rookie swinging at a 90 mile an hour fast ball, leaving the American economy faltering and home foreclosures increasing. Strike Three: Just two weeks before the national election, the Washington Senators (not to be confused with a real baseball team) declared the U.S. economy was in a free fall and unless an immediate and massive infusion of cash was thrown into the national banking system, the entire U.S. economy could collapse. Like a great home run hitter coming to the plate in the bottom of the 9th inning, our mighty leaders came forth with a sure fired plan, a whopping $700 billion "Wall Street bailout." This massive cash dump was guaranteed to plug the holes in the credit market, restore consumer confidence and put the American economy on the road to recovery. Three months later Congress is struggling to determine what happened to the money, why mortgage foreclosures continue to rise and why many credit markets remain stalled. Another swing and a miss. There is little doubt as to why the majority of Americans are skeptical about the latest and greatest spending package on deck in Washington. The behemoth $820 billion "stimulus" bill represents the fourth time that the U.S. Congress has promised to hit one out of the park, but in reality has failed to make it to first base. Other than sheer desperation, why should any American citizen have confidence anyone in Washington has the slightest idea really how to "jump start" the economy. Congress is certainly good at spending money on projects that it likes and that may or may not have some longer term societal benefits; however, from an economic perspective the additional national debt is likely to be of greater harm than good. Congress is poised to add $800 billion of debt on top of the $1.2 trillion debt projected for the 2010 federal budget. But before the Congress votes to spend this enormous amount of money, which is likely to fuel inflation and crowd out any possible private sector investment, maybe they should review their track record over the last year. Three strikes and they should be out. Since when is creating more and more debt the path to economic prosperity?