The United States Congress has okayed a $787 billion stimulus package in an attempt to stop the economic slide and, hopefully, put the economy back on track. This package was approved along party lines, after much in-fighting, for the incumbent democratic administration. As in the past, there has been talk about bipartisanship, but evidence is definitely lacking. Less than 5 months ago, a similar package was approved, with similar intent, for the republican administration; to date, there has been no change in the economy. Are we headed there again?

The monies that were doled out had no effect on the economy. A lot of bad banks got money which was spent buying up the worst banks to make the bad banks worse. The mortgage crisis that everybody claimed, and still claims, is responsible for the economic collapse is no better off; if anything, it is worse off.

With the first stimulus/bailout monies, there were no dictates as to how the monies would be used, and today, billions of dollars are owed the government by the tax payers but the government claims that it does not know how the money was spent. Yet, it is common knowledge about how much the banks got and how much the automobile manufacturers in Detroit got. In both cases, it would appear that the government got it wrong. Why put the money in the hands of the very institutions that clearly demonstrated that they have no ability to manage money, structure or re-structure a business so it would operate in a profitable manner? The banks spent their money to benefit them and to do nothing for the economy. They are still in the same state as before getting the money. The Detroit boys wanted, and got, money to continue building cars that the consumer could not buy, because of the state of the economy. Both institutions are now asking for more money as they continue to lay off employees. What happened to the job creation?

With the present stimulus package, the current administration claims that the economy would benefit from the creation of jobs, by handing out money to be spent on projects like upgrading the nation’s infrastructure, energy, healthcare, education, etc.  There is suppose to be a tax credit of $400.00 /yr or $13.00/wk for qualified individuals (twice that for qualified couples). There are other tax credits, like no alternative minimum tax (a break for the “wealthy”). President Obama is also expected to tackle the housing crisis by having mortgage holders decrease interest rates and possibly writing down some of the principle. There are, I understand, about eleven hundred pages of “to do list” in the stimulus bill.

Like the Republican Party, the Democratic Party appealed to a side of the American psyche that makes the size of this stimulus package appear necessary. They made compelling arguments to support its benefit. But hidden from view is a scary truth. Consider a construction company that is hired by a government agency to rebuild a bridge. That construction company must have employees, equipment, fuel to run the equipment, etc, etc as real time expenses. The construction company is not paid up front. Like most government contracts, payment in 60 days is a luxury. If, as in many cases, the construction company needs an advance in funds in order to hire more people (creation of jobs), upgrade and support the equipment etc. Where will the company get the money from? The banks are not lending money. You get the idea!

Will the economy respond, or will this be a mirror image of the previous attempt to halt the economic slide?

It appears to me that our government has been dealing with this crisis similar to a doctor who treats the symptoms, and ignores the etiology. No one has precisely diagnosed and document, definitively, the cause of the economic slump. If the disease is correctly diagnosed and treated, the symptoms will disappear. For example, the banks, with all of the money handed to them, are not making loans. They are not making loans because they cannot package and sell them as before. They cannot sell the loans because investors are not buying them, and the investors are not buying loans because the banks sold bad loans in the past. What will a tax credit do for a home buyer who cannot get a mortgage? How will a decrease in mortgage rates or write down of principle solve this problem?

Are we heading for more of the same?

Welcome to my Blog! I hope you find it interesting and informative. Constructive criticism is alright. But, please keep personal attacks out of your comments. Let us debate the facts without attacking each other.

I called this Blog “Palindrome Politics” because of the appearance of our political system in Washington. It seems that no matter who is in charge at the White House, or which party has a majority, the political practices always mirror those of the predecessors.