Monday, January 11, 2010

Of Stimulus and money fairies

Troglopundit is wondering:

I wonder if something similar won’t happen with the construction “stimulus.” If local communities are going ahead with projects they’d have put off, otherwise, because the federal dollars* are here now. Then, when the federal dollars dry up**, so will construction work.

Just wondering.

* Vegan-safe money, I’m sure, which fell from the magical money tree of its own accord and was gathered by simple hill-folk whose peaceful barter economy eliminates any need for money.

** Hey, even the money fairies have their limits.
In Red-Ink Tsunami: Why Old Ideas Can't Fix the New Government Perma-Crisis Stephen Goldsmith made the same point (though without fairies therefore all bonus points go to Trog).  The stimulus simply kicked the country's problems down the road.  Instead of states trimming their bloated budgets they used the stimulus money to plug the holes.  But the federal government, or more accurately the taxpayers, can't feed the states indefinitely.  We are stuck in the middle of national procrastination and sooner or later our politicians are going to have to look us in the eye admit that we are screwed and that there is no easy, painless fix. 

The government needs to quit spending more money than it takes in.  It can do that two ways and neither are pleasant.  We can raise taxes which has a negative effect on employment, productivity and savings.  We can cut programs but every special interest group has a special program that they consider sacrosanct.  Either way, nobody is going to be happy.

I hope that in the election this year we as a country do something that we haven't done in a very long time.  I hope we elect politicians that will make the tough choices that need to be made.  Otherwise, our economy is going to implode and all the fairies in the world won't be able to put it back together again.

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