On Friday, Washington Post business columnist Steve Pearlstein made a great case against the $825 billion “stimulus” monstrosity starting to take shape in the hallowed hallways of Congress. I’ll sample some of the good stuff:
Great news! We’re going to lose only another 2 million jobs! And it will cost the average American household only $6,000.
The basic problem is that over the past several years, the U.S. economy over‐expanded in response to a surge in debt‐financed spending by American households and government.
The current recession is the process by which a market economy adjusts to that reality, which in this case could involve shrinking capacity in many sectors by 10 percent or more. And while that adjustment will be brutal, it is necessary to get to the point where supply and demand get back into balance so that the economy can begin to grow again in a healthy and sustainable way. To try to stop that process and return things to the way they were would amount to nothing more than reinflating the bubble economy.
Unfortunately, he concludes:
What government can do, however, is try to manage the process so that it doesn’t spin out of control, as it probably would, and turn a recession into something deeper and longer. That’s what the stimulus is about.
Steve, you had me at hello! You’re telling me that the same gang of enlightened elected officials who fostered this economic downturn with their profligate spending, perverse incentives, and politicized subsidies are to be tasked with fixing the mess with an extra few hundred billion taxpayer dollars?
He proceeds to rhetorically ask “What is the optimal level of stimulus?” and admits that “In truth, nobody really knows.”
Nobody really knows, yet the continuance of bailout mania is the prudent course? At this point in the game Congress is acting as if it’s playing roulette with other people’s money. Oh wait, it is.