The bi-partisan stimulus package that President Bush signed with much fanfare yesterday says more about what is wrong with our political process than what it is wrong with our economy. The $168 billion package is a triumph of political expediency over economic basics and common sense.
We are faced with a unique situation. After seven years of reckless government spending and a protracted war, our economy should be booming. Instead, consumer confidence in our economic future is at an all time low and we appear to be sliding into recession. The nation's unemployment rate has jumped. Retail sales are down. Manufacturing activity is down. And our housing and credit markets are flailing -- largely as a result of our banking institutions gambling on sub-prime mortgages.
Any stimulus package should have considered our dire fiscal situation. Under President Bush we have gone from record budget surpluses to record deficits. We will all have to pay for this. My family's share alone of the increase in our national debt under President Bush is nearly $60,000. We cannot afford to do anything but make sure any stimulus package is narrowly tailored to put money where it is needed for maximum effect.
Instead, our government will spend about $168 billion it does not have on programs that will have questionable, if any, impact on stimulating our economy. Sending checks to people, as planned, will simply increase the deficit with no assurance of any economic boost. Direct rebates may make sense when there is a surplus, but under the current circumstances, it is fiscally irresponsible. The same is true for the business tax credits included in the package. Similar credits were part of the last stimulus package and had no discernable short term economic impact. Indeed, rather than providing tax credits, Congress should have considered creating disincentives for companies shipping jobs overseas.
It is telling that the most effective part of the pending stimulus package, is not even part of the package. By reducing interest rates, the Federal Reserve has done its part to help stabilize the housing market and the economy. There are, however, two other things that could have had an immediate impact on the economy without increasing the deficit. Neither of which made it into the package: (1) extend unemployment and food stamp benefits; and (2) release strategic petroleum reserves or at least stop filling them. This could have reduced fuel prices and provided immediate relief to the entire economy. It could have also helped those struggling to pay home heating costs.
We also need to begin to think about the economy over the longer term. Instead of eliminating estate taxes for the largest estates, why not create jobs by investing in our aging infrastructure. As many as one-quarter of our highway bridges are structurally deficient and we simply lose about 20 percent of our water supply nationally because of aging and inadequate distribution systems. Reliable estimates have shown that every $1 billion spent on construction and maintenance of our nation's infrastructure creates approximately 47,500 jobs.
We also need to provide tax incentives for the generation of power through renewable resources like wind and solar. Such incentives are necessary to influence the shift away from a carbon based economy and to provide sustainable energy and jobs over the longer term. Given our reliance on foreign oil and our concern over reducing greenhouse gas emissions, it would make sense that such incentives would have been kept in place and increased as warranted. In Washington, however, these items were specifically rejected for inclusion in the stimulus package.
Since for the foreseeable future any spending the government does will be deficit spending, as taxpayers it is our responsibility to, at least, insist that the government spend the money it does not have, in a meaningful way. Although a short-term boost to the economy would be nice, turning our economy around is not going to happen overnight. We need a systemic change that considers long term growth and sustainability, as opposed to greed and short term economic gain, as the basis for our economic policies. We need an informed electorate who understand that immediate gratification is sometimes beyond our reach -- a lesson we teach our children every day. We can weather the purely cyclical aspects of any economic downturn, if we start putting strategies into place that help maximize the potential for economic growth and prosperity into the future.
Thomas Edison said that three essentials to achieving anything worthwhile were hard work, perseverance, and common sense. Unfortunately, the stimulus package demonstrates that common sense is not very common in Washington these days.