THE BLOG

The Truth About the Stimulus Package

03/06/2009 05:12 am ET | Updated May 25, 2011

It may not be 'political' to openly say so, however, the United States has barely enough heft to lift its own boat; to expect it to lift those of all nations, of the global economy, is a noble thought but completely unrealistic. All nations will have to do their share for the worldwide bailout. And the plain truth is that there is a great difference between the two main parts of the stimulus package in terms of where the funds end up. The money granted to banks and to taxpayers (the part the Republicans want to increase) can flow any old place. The banks can lend money to corporations that open plants overseas and outsource jobs, or they can simply invest in other nations' economies. The same holds when taxpayers buy goodies with the money they are allotted.

In contrast, funds allotted to making America greener, shoring up the crumbling infrastructure, improving the education of Americans, and developing new technologies at home -- the part the Democrats are trying to protect from Republicans -- all initially help the U.S. economy (other nations will benefit in turn). Funds dedicated to fixing a bridge in Minnesota, to the electrical grid that serves the nation from coast to coast, or to local schools from New York to Los Angeles -- will not end up in China, India, or any other place.

One may say that all nations are throwing money into the bailout pot, and we should add ours, making for the needed grand global stimulus. However, other nations are dragging their feet. Germany finally decided to cough up some money, but far from enough. China is focusing on protecting its economy by manipulating its currency, and so it goes in other nations. Until they are willing to do their share -- given the precarious condition of the U.S. economy and its already over-stretched commitments and shortage of funds -- the Obama administration is right to lift our boat first. That is, rail against even larger tax cuts, and support investment in America's future.

Amitai Etzioni is a University Professor at The George Washington University, and the author of The Moral Dimension: Toward a New Economics. He can be reached at icps@gwu.edu