I'm one who thinks that the new stimulus plan for the US being debated, is not as much of a stimulus plan but rather, it is a massive subsidy plan for Agriculture, the Environment and Education.
I would go further to say that this bill; " The American Recovery and Reinvestment Bill of 2009", is a little inconsistent with its objectives.
For example, if they were serious about stimulating renewable energy, they would have placed an emphasis energy efficient transport, ran by renewable energy in their section dedicated to transport. Also, they made reference to retrofitting Urban Development dwellings with new energy efficient means, so they know that it would be useful for transport as well.
Giving a subsidy to transport, as the document showed in title XII, without articulating transport with renewable energy as most of this bill seems to be centred around, defeats the purpose of allowing renewable energy to flourish all around and be a pillar of growth for the American economy. At least, it would be a little difficult for alternative energy to emerge as a real pillar, for America "right now"--something this stimulus plan is supposed to be for; "right now". Reason being that it would be difficult, because the gas and auto-mobile industry, have lobbied effectively against alternative energies, so, strengthening them, defeats the purpose of allowing alternative energy subsidies--wasting money.
To be fair however, this bill, should be entitled for all intents and purposes; "The Environmental and Education Subsidy Plan, 2009". The "stimulus plan", in my humble opine, does not actually deliver a meaningful stimulus plan. It just delivers an alternative energy subsidy, on top of the agricultural subsidies and increased 'special' funding for education.
There was hardly, or, very little, mention of small businesses assistance.
If you are serious about providing a stimulus, you would have made sure small businesses, got credible tax relief and very handsome subsidy programs along with patent and diversity programs. While they have a section dedicated to commerce, the funding for which, is pretty weak. In fact, compared to the other major headings, you would have missed any inclination to have a small business facility at all.
Now, a big issue bandied about is a 3k tax credit for employee's. However, how is this supposed to do to stimulate innovation--which the USofA, desperately needs? On top of that, how do you improve innovation, when patent making is not even mentioned? While they allow small business tax breaks for having two to three licences for business persons, it does not go far enough.
With this stimulus, seeing that America is the self proclaimed leader in the world, there should not be protectionist provisions like how we saw with the Agricultural subsidy program in this bill--which really is what it is. The WTO would have to take a hard look at this, if they truly care.
Defence got a very small bone in this, but not certainly tied heavily to new science in defence. This is keeping with the commitments on lowering defence systems as a Democrat mantra.
More importantly, the environment and issues related to the environment, got the lion's share of this stimulus package. The budget provisions are mentioned either directly, as in the title subjected to itself, or, snuck into other headings and sub-headings such as transportation and/or urban development.
I guess when president Obama said he will be investing in the future of Americans, he meant it.
Moreover, there is allot funding for funding the bureaucracy that will overseeing how the money will be doled out. In fact, bigger government would have been a no-brainer. If this is the case, they will have to re-invest the administration fee's after they have been rolled out this year--I know it won't be enough as government funding, never is adequate.
This was a good thing. But, will this monitor progress, rather than just be another agency to do basic administrative work? This would have worked far better, at the same time training people to do more introspective governmental services.
Furthermore, while state government's get 80 billion, out right. The 80 billion, is for education purposes, primarily and half of the other portion, is for the administration of this 80 billion. It's a total wash. We need to get people back to work, not back on their tail feathers in the classroom.
So much more things could have been done, if there wasn't so much politics involved in this stimulus plan. These house and senate democrat's that president Obama inherited, will get him into serious trouble. He had better re-evaluate this plan and include some real stimulus, or else he would be a president who spent allot, to get nothing.
Up to the minute US House document, here:http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf
Summarized plan, here:http://beacheconomist.com/Appropriations_Stimulus_0115.pdf
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2 comments:
President Bush took a parting shot at the French by raising the duty on Roquefort cheese from 100% to 300%. This was in retaliation for a French ban on American beef. The French are notorious for protecting their crummy agriculture industry. Many people think President Obama will reverse the decision. He loves the French and they love him back. A cheesy dispute with France
Hi Youri,
I didn't intend to misrepresent your position on the stimulus plan & thanks for the link.
What I'd like explained is how, in economic theory, a stimulus plan can actually provide a net gain to the economy in terms of wealth creation?
The facts of the matter are that a government can only spend what it borrows or takes in tax, and borrowing and taxation represent a transfer of wealth from one part of the economy to another, not a net gain. In concrete terms, money that private investors give to the government is money that they don't use to create businesses and jobs themselves, or lend to other private individuals to create businesses and jobs.
If we only focus on the money that the government spends then we don't see what doesn't get spent by the people and institutions that gave the government the money to spend.
If a government can only transfer resources from one part of the economy to another, where is the gain and how will a stimulus plan, any stimulus plan make any sustainable difference?
Regards,
Tim
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