â€œWow, these grapes are sour!â€Â A fitting epitaph for Republicans as they try to grab the spotlight to bitch and moan about Obama, the Democrats, and spending while really only offering one policy prescription for the economic dire straits weâ€™re in:Â tax cuts.Â And tax cuts they got! Even a casual glance at both bills reveals that when it comes to spending, both houses of congress arenâ€™t too far apart. The Senate bill is the one where you wonder what happened to the party that advocates for states.Â The sizable tax cuts, the lack of local spending for statesâ€™ local governments, and the glaring gap between the Houseâ€™s bill on infrastructure spending makes me question some Republicanâ€™s love for the states and localities that comprise these United States.Â Yeah, weâ€™ve heard the old saw about this stimulus bill being the proverbial â€œDemocratic Christmas Treeâ€ when it comes to spending, but câ€™mon! The idea is to get people back to work so they have money to spend on products and services that come from private businesses — and that wonâ€™t come from tax cuts alone.
It doesnâ€™t take much effort to realize that every day private industry is shedding jobs, that unemployment rolls are growing, and consumption is falling.Â In short, people are not spending money, and private industries are doing the same.Â Credit is tight, people are saving their dollars, businesses are cutting and slashing budgets to weather this storm.Â Itâ€™s batten down the hatches time, folks. Itâ€™s a natural response when times are tough.Â But what force turns fear into optimism?Â What entity has the kind of power and resources to â€œprime the pump,â€ shock the system out of the current doldrums and restore large scale trust?Â Government.Â In fairness, tax cuts do have a stimulative effect at times, but they take a long time to work. Whatâ€™s needed are spending programs (yes, spending) that will increase GDP.
Government spending on programs and projects will lead the way to create stable jobs that will allow individuals to feel optimistic about buying products and services that private businesses provide.Â However, unbridled consumption is something that comes with consequences to our environment and even to our psyche. I have long been critical of societyâ€™s fixation on â€œthings,â€ and I am in no way saying that we need to go back to a yuppie ideology. Rather, since weâ€™ve already tried variations of the kind of Reagan-inspired economic policies hardcore Republicans have embraced for over a generation — and those polices have clearly shown their limits and their failures — itâ€™s time to see if the democratic pragmatism Obama embodies works.
Obamaâ€™s first press conference underscored many of the points I just made above and in past columns.Â Getting the unemployment rate down to a level thatâ€™s accepted as full employment (which some have stated is five percent or below) is crucial, since a great deal of the spending that will drive the economy will come from consumer spending.Â Other areas of spending are from the following:Â Government, businesses, and exports. If, however, we are to take Chuck Toddâ€™s question about financial priorities to heart (i.e., spend or pay-off debt), I think the answer, though not universal, would be a combination of both.Â Spending will drive production, which in turn increases the likelihood that employers will hire.Â However, if there is such a thing as circumspect consumption that tempers the urge toward irrational exuberance, then ideally thatâ€™s what we should be striving for.Â It may mean less â€œchasing after the newest and the shiniestâ€ and learning to make the durable goods we consume last by seeking out maintenance rather than replacement.Â It will also mean adjusting GDP goals, increasing personal savings, and reinvesting for the long term. Itâ€™s a kind of financial sobriety that we often hear preached, but is rarely practiced.
If Obamaâ€™s stimulus plan and TARP 2.0 works,the economy rebounds and the worst is averted, the era of â€œGovernment is not the solution to our problem; government is the problemâ€ will be over.Â The new era will not be like the New Deal or the Great Society. Rather, it will most likely reflect the temperament of the generation in power — and those who elected them.Â Iâ€™m not one of those people who read Generations by Neil Howe and William Strauss back in the early â€˜90s and thought â€œHmm…Gen Xers are going to be the ones who are more practical than their Boomer brothers and sisters, and weâ€™re going to see a more responsible age.â€Â However, if Obamaâ€™s pragmatic approach to governing is any indication, we may be headed into an era that could be described as not only The Great Transition, but The Great Clean-Up as well.