Some of what I’m about to discuss here may have already been rendered obsolete based on whatever actions the US Congress has or hasn’t taken on President Obama’s economic stimulus package. But the topic still bears discussion, seeing as it is a very important piece of legislation.
As a lifelong fiscal conservative, I must confess to being aghast at the almost $1 trillion price tag of the stimulus package. But I’m also aware that the world is confronting the worst economic crisis since the Great Depression of the 1930s, so extraordinary measures seem to be appropriate under the circumstances.
I am pleased to see Republicans arguing against some of the new federal spending programmes that will continue long after the current economic crisis is over. But I must also note that many of these so-called fiscal conservatives’ voices were silent while former President Bush was running up half-trillion-dollar annual budget deficits to finance his spending programmes and the Iraq war.
I am particularly disappointed in Senator John McCain, who has made absolutely no effort to try to forge the kind of compromises he has in the past with Democrats on economic and other issues. Having been soundly defeated by Obama in his bid for the presidency, it appears he now wants to upstage President Obama and thereby salvage what’s left of his political reputation among his fellow Republicans in the process.
President Obama has wisely avoided getting involved in the negotiations being conducted by Senate moderates about what specific programmes should be cut from the stimulus bill. He has instead focused on the urgent need for a substantial package of tax cuts and infrastructure spending to address America’s economic crisis. To that end, he has repeatedly urged members of Congress from both parties to work together on the specifics.
While I support most elements of the economic stimulus package and believe that it will be passed and signed into law before the end of February, I don’t think this or any similar economic stimulus measures by other countries will resolve the current economic crisis.
The world’s banks won’t be ready or able to start lending money again until the US and other governments take ownership of their banks’ ‘bad assets’. Once this has been done, these newly ‘washed’ banks can raise private capital which they’ll be eager to lend to credit-worthy businesses and consumers. Mind you, these ‘bad assets’ which our governments will then be stuck with are not actually worthless. But unwinding these ‘securities’ – which are actually packages of debt containing both good and bad mortgage or consumer loans – to figure out which elements have value and which ones don’t will be a long and time-consuming process. Yet the world’s economy is dependent on banks and on private investors who can’t afford to wait and find out what these securities are worth. Therefore, our governments must do so.
Charles Laffiteau is a lifelong US Republican from Dallas, Texas who is currently pursuing a PhD research programme in Environmental Studies at Dublin City University.
