The basic principles of banking have always been a bit fuzzy to me. For almost two years, I struggled with the concept of a ledger – desperately trying to collect receipts, remember specific amounts and record it all before things got too out of hand.
Unfortunately, even if I was able to successfully remember every withdrawal from my account, I was forced to rely on math skills that made even the most dimwitted calculus student look like Albert Einstein in comparison. As a result, I often resorted to breaking the proverbial laws of banking, and “writing checks my ass couldn’t cash.“
A couple of years, and hundreds of dollars in overdraft fees later, I finally realized that there is one great truth in the field of banking-if you’re taking out more than you’re putting in, you’ll probably wind up getting screwed.
Enter president-elect Barack Obama, who this week learned that he would be inheriting a record high $1.2 trillion federal deficit. Luckily, Obama has a plan, promising to “cut unnecessary spending,” and do everything within his powers to get the American economy back on track.
A big part of Obama’s recovery strategy is the often-talked about “economic stimulus plan.” Stimulus, that’s a good thing, right? Definitely not something that will almost double the deficit over the next two years, and have almost no positive effects on the economic situation, right? Wrong.
The Obama stimulus will consist of spending and tax cuts which could potentially add another $1 trillion to the federal deficit before 2011, and many economists are claiming that even such an obscene level of spending won’t be enough.
According to a report by Christina Romer and Jared Bernstein, two of the Obama’s top ranking economic advisors, the plan would essentially peak toward the end of 2010, meaning this is where we can expect to see its most impressive results.
The report predicts that, without the stimulus plan, unemployment in 2010 would hang somewhere around 8.8 percent, but with the plan could be cut down to a much more manageable 7 percent.
Just in case you were wondering, as of December 2008, unemployment sat at 7.2 percent, meaning that even with Obama’s plan, we’ll be just as screwed two years from now as we are today. Don’t forget, we’ll also have added another trillion dollars to the federal deficit. Money well spent, indeed.
In order to increase the effectiveness of the Obama plan, some critics are recommending making the plan bigger. These people call for more deficit spending, more money pissed away into failed entitlement programs and more government control over an economy that’s been on life support for so long it’s probably brain dead. These people call for cutting taxes, and therefore revenue, while at the same time increasing spending. These people are talking about creating a federal deficit even larger than what this country saw during the Great Depression. Needless to say, these people are fucking crazy.
If a trillion dollars drops the unemployment level two tenths of a percentage point over the next two years, how much money do these lunatics think is necessary to fully fix the problem?
Perhaps it is with this question that we encounter the fatal flaw in Obama’s proposed solution. Spending massive amount of money in an effort to claw your way out of debt is about as effective as using gasoline to put out a forest fire. Maybe the average citizen would see a small amount of economic relief if instead of taking $1 trillion of taxpayer money and blowing it on the New Deal Part II, that money was left where it belonged – in the pockets of the people who earned it.
Unfortunately, as Inauguration Day draws near, I’m afraid citizens won’t be experiencing any unexpected swelling of their checkbooks, and more likely will have to embrace the inferno caused by the first of many failed experiments in Obama-nomics.
JAMES NOONAN thinks the American Dream was a hell-of-a good thing while it lasted. Tell him what you think at jjnoonan@ucdavis.edu.
