Bentzen’s Blog

HR 1 – The New Stimulus Plan
by Brian Bentzen

$825 billion is a lot of money.  It’s a lot of your money.  And it is up for grabs.  A lot of the money would go towards tax breaks, but the rest will lead to increased spending and larger government.  This money could be put to great use, but should it be used at all?  

I’ve been reading a bit about this bill, and even went so far as to download the full 647 pages.  The bill itself is broken down into all of the various categories of spending that are involved.  There are sections about energy, transportation, medicare, medical records, military, education, tax breaks, etc.  The end result is much greater government spending, but much of the spending is via existing government fixures that will come to depend on the new income stream (over the next two years).  When the money runs out, we’ll already be in the more debt than ever before as a function of GDP.  We’ll be deeper in debt than at the end of World War 2 and worse off than when Reagan dealt with the deficit in the 1980s.  

The New York Times posted a blog article today that chronicles the thoughts of six leading economists.  I agree with Stuart Butler’s opinion.  In order to grow, we need to reduce the size of government, reduce costs and cut taxes.  Our corporate taxes are the highest in the world.  When we overtax our businesses, we put them at a competetive disadvantage compared to foreign businesses by forcing them to raise prices to pay their taxes.  Ultimately, you pay their taxes every day at the cash register.

If we must spend money we don’t have, we should spend it on programs that will pay back dividends.  Education, agriculture, progressive energy and transportation infrastructure should be the backbone of the stimulus.  These types of projects can be implemented by the private sector through guaranteed low interest loans offered to business owners or new startup companies.  The answer is not more government jobs, but the government offering the opportunity for free market Americans to create jobs for themselves and others.

After this bill goes through, the government will be left with almost $1 trillion in debt.  The Fed has the power, really, to create money out of thin air.  This creation of US dollars is intended to cause inflation, which has been close to flat in the past year.  With the new money, the Fed is now planning to buy treasury bonds.  This will put the newly printed money directly into government coffers.  For the short term, this may work well as a means of funding our record debt, but it may lead to inflation down the road that could come back to harm us in the end.

What do you think about the record government spending?  Who do you think the record stimulus should go to?  Get in touch with your congressman and let them know before we wind up with larger government and greater debt.