What’s Wrong With The Stimulus Plan

Jan 08, 09 What’s Wrong With The Stimulus Plan
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Well, it was inevitable folks.  Critics from across the ideological spectrum are rearing their heads in order to voice their opposition to the proposed stimulus plan.  Despite his inauguration still being two weeks away, Obama and his advisers are working with Congress to have the plan ready to sign the day after he is sworn in.  However, Republicans in Congress are preparing to mount an attack on the stimulus plan on political grounds, while some economists are beginning to highlight the plan’s perceived shortcomings.

Despite the growing depths of the current recession, some economists believe that Obama will have great difficulty in allocating $800 billion over two years.  They assert that President-Elect Obama and Congress have inhibited their ability to respond to the broad nature of this recession through their emphasis on “shovel-ready” projects and conventional solutions to this deep crisis.  Promoting shovel ready projects, or infrastructure projects that have been planned and approved, but are only awaiting funding, fails to provide America with a long-term blueprint for a true infrastructure overhaul.  This country needs a vast technological revolution, which bricks and mortar projects cannot provide.

Others see proposals, such as tax credits for individuals and businesses, as policies that have proven ineffectual in the past.  If you crunch the numbers, these modest tax rebates will do little to make up the forecast difference between GDP and the forecast drop in consumer spending.  Although the tax credits for businesses may provide limited gains at best, those proposing them display a fundamental misunderstanding of basic economic theory, while underestimating the unique nature of the current economic crisis.

The initial bailout plan is a good start.  However, I believed that this initial stimulus plan was the first in a series of bold proposals that would transform our economy.  If the Obama administration believes that it could pass this package and then rest on its laurels, then we are in trouble.  It is essential that lawmakers do whatever it takes to pull America out of this recession.  We are in perilous times and things can go from worse to worst in a second.  There is nothing inherently wrong with the proposed stimulus plan, however if it is not followed by more long range policy proposals and unorthodox thinking, this stimulus plan will only temporarily stave off the inevitable.

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  1. The Stimulus Plan Won't Work | Recession Survival Tips For Financial Success - [...] original stimulus plan, with its focus on shovel ready infrastructure projects, was flawed from the beginning.  The plan as…

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