It seems Obama is falling for the same flawed economic logic that fooled FDR back in the 1930’s. The New York Post is reporting that Obama is wanting to push through a $500 million (4% of US GDP) stimulus package similar to FDR’s “New Deal”.
While investing in infrastructure, replacing bridges, and rebuilding roads is great for the construction industry, it suffers from “lag”. Often, by the time the investment is felt from an economic standpoint, the economic issues are past. It is not a quick fix to economic woes, as Roosevelt found out in the 30’s.
Jason Furman, one of Obama’s chief economic advisers, wrote, “In the past, infrastructure projects that were initiated as the economy started to weaken did not involve substantial amounts of spending until after the economy had recovered.” Alan Blinder, another of Obama’s economic advisers, said that spending money on public works for the purpose of economic recovery was “wasteful”.
So here we are, looking at what essentially is pork (even larger than Ted Stevens’ wildest dreams) and it’s being pandered as an economic recovery package. I have no problem with backing the repair of our aging and sometimes dangerous infrastructure, but I certainly don’t like the packaging.
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Posted under Economy
Written by admin on November 18, 2008
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Why do we not learn from the lessons of history?
But like you said, this new Democratic administration simply wants to grow the government.
If we are to get out of this economic mess, the government needs to stay the hell out of the way, and let small business owners grow their businesses.