The stimulus bill was created in the image of Franklin Roosevelt’s “New Deal” which followed the dramatic tumble of the stock market in 1929 which preceded the Great Depression. The general theme of the “New Deal” was to share more wealth with the masses while instilling regulations for business transactions in order to provide an economic environment that was more reliable to all parties participating and less exposed to corruption and deceit. The Securities and Exchange Act of 1932 and 1933, which created the SEC, provided new corporate oversight which provided lots of work for accountants because it required audits; which are thorough verification of a company’s financial statements by independent accountants to verify that the companies were not lying about their revenue, expenses, assets or liabilities. The New Deal also created social security and unemployment compensation. However, the part of the New Deal that this recent Act is most trying to emulate is the large sums of government money that were dedicated to a myriad of construction projects that improved that facilities, infrastructure and resources provided by government. This provided desperately needed jobs and made strides into laying a framework for the USA to be successful and fruitful for years to come.
This stimulus bill ends up being a list of different projects that will be embarked on, conceptual guidance of the organization of the projects and a sum of money budgeted to fund each of these projects. The remainder of the bill includes tax cuts that are meant to influence the behavior of the taxpayers; i.e. credits for new car purchases, credits for first time homebuyers, credits for education and general a little extra cash for the middle class to spend on each other’s products and services. Lots of good things to expect: there will be a lot of new roads built & new public transit, scientific research, batteries will be manufactured for electric cars (USA gov’t has decided that batteries are the future of vehicles and not hydrogen which is my vote) , power plants and power lines will be upgraded to support renewable energy sources, more food stamps, more free child care for the poor, computerization of medical records, more medical research, and improvements public educational system.
These are all good things in theory; and certainly a refreshing change in government momentum. But, there are some major problems. Although these are great ideas; the money for them doesn’t exist. It seems that each of these plans must really work like a charm to even provide a glimmer of hope that someday this will have all made sense financially. However, one good thing about the gov’t is that it can print more dollars; and literally create the numbers needed to pay back the debt. Do expect inflation. It will suck, wages will stagnant behind rising prices as the dollar weakens against international currencies. Another big problem with printing money is that eventually, USA debt is not so attractive to countries with resources to lend it as they will expect to be repaid with devalued dollars. There two other problems with these very well intentioned pursuits; these projects must be temporary and finite to work. Meaning: build, improve and get out. The problem is that this bill is creating new agencies that will need to continue to be fed with gov’t money indefinitely to work; and many will be the types of programs that merely will be hard to refuse when it comes time to feed them more money, thereby permanently increasing the gov’t’s budget. Another huge problem is that while moving towards a “greener” nation and world is beautiful, fabulous, perfect, breeds optimism, has health benefits, will make a better life for all; we just don’t know how to do it yet. We’re prematurely, as in next month, putting a whole lot of money into projects that we don’t quite know whether they are long term answers to environmental issues. I’m hoping that we get it right; but I’m dreading what we’ll get wrong. And after that, I don’t know when additional money for these types of efforts could be coming or for any other types of gov’t endeavors, such gov’t funding for helping spread health care benefits, “universal” or subsidized. Also, the biggest problem of all is not addressed by this act which is that basic fundamentals of our economy still don’t add up because the USA consumes more than it produces, and we're living off the labor and resources of other people and countries (as if we didn't know that) and like Bob Dylan sings, a hard rain is goin’ fall. Sometime in the near future, our standard of living can be expected to incur a serious decline, esp as China’s labor force becomes more free and capable of negotiating better wages and work conditions; which doesn’t bother me as I care about those worker bees.
In my crystal ball, I’m seeing the economic momentum in general is going to take on a different twang and many of us will start to wonder how to tickle that federal funny bone for approval to move forward in new endeavors rather than focusing on consumers. There are going to be many, many new construction gigs (as in get out your shovel and hard hat) and a modest yet marked instant increase need for professionals. The next congressional move which will be to spend the rest of the bailout bill will prob get the lending moving again and that will seriously help businesses operate in the matter they’ve been designed to flourish in. The foreclosure crisis will be addressed and an answer will be agreed upon to hault the evictions and foreclosures. In fact Fanny Mae, Citi and Chase have all placed a moritorium on foreclosures in anticipation of this pending gov't endeavor. These acts together should get the economy moving; but there will be no leaps and bounds for the general population’s wealth until there are leaps and bounds in technology or production (ie the internet boom of the ‘90’s). So, plan to feel lucky to live a sustained life that isn’t improving twice over every year for a while (although the internet still has dividends to pay!).
Regulation in business will need to be revisited. The delicate balance of freedom of the people and trade (free market economy) and government regulation have yet to perfect their minuet. No one has the answer to yet; but more progress will be needed to reduce the possibility for disingenuous business dealings.
