Stimulus and the Fear of Success

You would think that most people would want the stimulus package to succeed and rescue our economy, but it appears that the chief motivating factor for the Republicans’ opposition in Congress to the American Recovery and Reinvestment Act was the fear that it would succeed. This would explain why they offered so many lame arguments which they must have known were pure baloney. The principal incentive of politicians is survival. Success in turning the economy around could and will lead to even more Democratic success at the polls.

The Republicans in Congress spoke as if they had never heard of John Maynard Keynes. Keynes, the most influential economist of the 20th century, advocated the government’s use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions. Both Democratic and Republican presidents have adhered to Keynesian economics. Today’s leading economists are Keynesians.

In their debates, the Republicans decried parts of the stimulus bill that they declared to be wasteful spending. The total cost of the programs that they criticized amounts to no more than 2% of the total bill. Moreover, Republicans sought to amend the bill with added appropriations that would have cost more than the parts to which they objected.

Among the parts of the stimulus bill that the Republicans claimed to be wasteful is $500 million for flood reduction projects on the Mississippi River. In addition to the fact that that money will produce thousands of new jobs, it will also help relieve the New Orleans area of the threat of disastrous floods like the one produced by Hurricane Katrina. The Republicans also criticized the provision of $850 million for Amtrak. Here again, the money will produce thousands of new jobs and lower the use of automobiles, improve the environment by lowering auto emissions, and ease our dependence on foreign oil.

The Republicans opposed many parts of the bill that would create thousands of new jobs while attacking serious problems including health problems facing Americans. They opposed $650 million for wildfire management, $412 million for the Center for Disease Control, $500 million for the National Institutes of Health, $88 million for the Public Health Service, and billions more to fight various health problems including smoking, STDs, alcohol abuse, and lead-based paints.

In their arguments against the stimulus bill, the Republicans robotically repeated certain fallacious talking-points in the hopes of capitalizing on the ignorance of their most uneducated constituents. One of the talking-points was the tired canard that governmental spending did not solve the recession experienced by the Japanese in the 1990s. Leading economists have explained that the Japanese recession lasted so long because the Japanese government waited too long before infusing massive amounts of money into the system. Instead of making one big push to pump-up the economy with economic shock therapy, Japan spread its spending out over many years, diluting the effects. American economists believe that the lesson of Japan is that spending to revive the economy must come in quick, massive doses, and be continued until recovery takes firm root.

Another canard served-up by Congressional Republicans and swallowed by simple-minded citizens was that the New Deal did not help cure the Great Depression of the 1930s. Nonsense! Every well-informed person knows that the New Deal, inaugurated by F.D.R. when he took office in 1933, put millions of people to work and profoundly improved the economy of America. By May, 1935, industrial production was 22% higher than in May 1933. Commerce Department data shows that the economy grew at an annual rate of about 13 percent from 1933 to 1937 and more than 10 percent from 1938 to 1941. Except during the 1937-38 Recession, unemployment fell significantly every year of the New Deal. Also, Gross Domestic Product grew at an annual rate of around 9 percent during Roosevelt's first term and around 11 percent after the 1937-38 dip.

The Republican alternative to the stimulus plan was not a better plan. It was misinformation, obfuscation, and blather.