There seems to be a lot of confusion around the meaning of “economic stimulus.” This is not surprising, given the fact that President Obama seems more concerned with convincing the American people that the stimulus bill should be passed according to his timetable, than explaining HOW and WHY the bill will actually work. On February 5th, President Obama remarked in a speech:Well then you get the argument "this is not a stimulus bill, this is a spending bill." [PAUSE] WHAT DO YOU THINK A STIMULUS IS? [LAUGHTER]
Obama is certainly correct that Keynesian economic stimulus involves the Government spending money, but a “stimulus bill” is not supposed to be just any oversized spending bill. Under the Keynesian model for economic stimulus, the Government spends money to create jobs, reinvigorate commerce, and expand new areas of the economy. While any form of government spending can arguably produce the above results, certain types of spending accomplish these objectives better than others. Infrastructure is a classic example of GOOD economic stimulus. The Government makes the initial investment necessary to build a highway to an undeveloped area outside a major city, which ideally will encourage contractors to build houses in the area, prompt businesses to open in the new neighbourhood, require telecommunication to be built, and so on. In this scenario, a onetime investment has “stimulated” the creation of an abundance of long-term jobs and commerce. This is broadly known in macroeconomics as the “multiplier effect.” Now contrast this with the present stimulus bill’s $600 million provision to buy hybrid cars for the Federal Government. This expenditure will give a onetime boost to the automotive industry which will trickle down to suppliers and others, but it does not have the same potential to stimulate exponential economic growth.
Obama’s stimulus bill is full of provisions that do not embrace this “multiplier” effect, and will arguably do little to perpetuate long-term economic growth. Some of these provisions might be worth-while expenditures, but they are NOT good stimulus in the eyes of many.
The aforementioned joke is among the many comments that Obama has made to discredit and belittle those who oppose the present stimulus bill. He has consistently characterized the opposition to his bill as “phony arguments” and “petty politics,” and even had the nerve to tell a group of senior Republicans that they “…can't just listen to Rush Limbaugh and get things done.” Needless to say, these comments are very insulting to GOP Members of Congress, the voters they represent, the 43% of Americans who DO NOT support this bill (Rasmussen), and everyone else who believes the Government should take care when spending almost a TRILLION dollars of taxpayer money.
At present, only three of the 219 Republicans in the House and Senate are supporting Obama's stimulus bill. Some Republicans simply do not believe it is possible for government spending to fix the economy. These individuals, cannot support the stimulus bill as a matter of principle. Indeed, while historians often romanticise F.D.R.’s New Deal—down the hall in the Economics Dept—surveys have shown that approximately 50% of economists believe that the program actually prolonged and worsened the Great Depression. Many other Republicans are willing to accept the spending in this bill, but have valid concerns about its ability to produce timely and targeted results. Even the Congressional Budget office has raised serious concerns about the time required for the bill to take effect, the number of jobs it will create, and the long-term impact on the GDP of the economy. To this end, while politics are inescapable in Washington, Obama’s comments are efforts to illegitimatize the very legitimate concerns and beliefs of Republican and Democratic dissenters in the House and Senate.
In my opinion, Barack Obama has lacked leadership in the handling of this bill and has failed to acted in a bipartisan manner. To his credit, a large portion of the present bill does consist of Republican-friendly tax cuts, and he did personally ask Speaker Pelosi to remove some of the highly contention provisions from the House Bill (for example the 200 million for birth control). But his rhetoric has failed to demonstrate respect for those who hold opinions that differ from his own—either you agree with Obama or are an “old Washington” petty partisan. Despite claims during his campaign, Obama really has little to no experience bringing about bipartisan cooperation, and this deficit has been apparent over the past few weeks. Whether or not he is serious about developing such skills will become evident as time passes. Either way, he should probably refrain from suggesting that the Republican Party gets its policy platform from Rush Limbaugh.
The last couple of weeks have undoubtedly been a learning curve for President Obama and his staff. Furthermore, I recognize that this stimulus bill would not be an easy “first feat” for any new administration. But Obama needs to quit “talking at” citizens and Members of Congress who disagree with him and start engaging in dialogue that meaningfully addresses their concerns—even if the result is a respectful agreement to disagree.
Obama’s stimulus bill is full of provisions that do not embrace this “multiplier” effect, and will arguably do little to perpetuate long-term economic growth. Some of these provisions might be worth-while expenditures, but they are NOT good stimulus in the eyes of many.
The aforementioned joke is among the many comments that Obama has made to discredit and belittle those who oppose the present stimulus bill. He has consistently characterized the opposition to his bill as “phony arguments” and “petty politics,” and even had the nerve to tell a group of senior Republicans that they “…can't just listen to Rush Limbaugh and get things done.” Needless to say, these comments are very insulting to GOP Members of Congress, the voters they represent, the 43% of Americans who DO NOT support this bill (Rasmussen), and everyone else who believes the Government should take care when spending almost a TRILLION dollars of taxpayer money.
At present, only three of the 219 Republicans in the House and Senate are supporting Obama's stimulus bill. Some Republicans simply do not believe it is possible for government spending to fix the economy. These individuals, cannot support the stimulus bill as a matter of principle. Indeed, while historians often romanticise F.D.R.’s New Deal—down the hall in the Economics Dept—surveys have shown that approximately 50% of economists believe that the program actually prolonged and worsened the Great Depression. Many other Republicans are willing to accept the spending in this bill, but have valid concerns about its ability to produce timely and targeted results. Even the Congressional Budget office has raised serious concerns about the time required for the bill to take effect, the number of jobs it will create, and the long-term impact on the GDP of the economy. To this end, while politics are inescapable in Washington, Obama’s comments are efforts to illegitimatize the very legitimate concerns and beliefs of Republican and Democratic dissenters in the House and Senate.
In my opinion, Barack Obama has lacked leadership in the handling of this bill and has failed to acted in a bipartisan manner. To his credit, a large portion of the present bill does consist of Republican-friendly tax cuts, and he did personally ask Speaker Pelosi to remove some of the highly contention provisions from the House Bill (for example the 200 million for birth control). But his rhetoric has failed to demonstrate respect for those who hold opinions that differ from his own—either you agree with Obama or are an “old Washington” petty partisan. Despite claims during his campaign, Obama really has little to no experience bringing about bipartisan cooperation, and this deficit has been apparent over the past few weeks. Whether or not he is serious about developing such skills will become evident as time passes. Either way, he should probably refrain from suggesting that the Republican Party gets its policy platform from Rush Limbaugh.
The last couple of weeks have undoubtedly been a learning curve for President Obama and his staff. Furthermore, I recognize that this stimulus bill would not be an easy “first feat” for any new administration. But Obama needs to quit “talking at” citizens and Members of Congress who disagree with him and start engaging in dialogue that meaningfully addresses their concerns—even if the result is a respectful agreement to disagree.
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