Stimulus Shmimulus

Now that the federal government has committed to spending no less than $850 billion (the $700b plus the earmarks plus the earlier tax stimulus package) on trying to dig us out of a hole, isn't it time for some common-sense economic intervention? For two years some of us (including Tom Friedman for example) have been advocating in favor of a Rooseveltian, WPA program that would help with the REAL issues: jobs, updates of infrastructure, generating trust in the government and the future.

There are countless federal and state-wide projects that have been languishing and will continue to do so as funding is cut to accommodate wars, purchases of questionable mortgages, bailouts of the AIGs of the world and so forth. At the same time, the unemployment rate, currently at 6% will continue to rise. (Let's not forget that the 6% only counts those receiving unemployment compensation. For all of the independent contractors whose businesses had dried up and those who have used up their unemployment insurance, they no longer are counted in that 6%.) It's worse than it looks, and getting worse yet.

What would turn the tide? JOBS! People who are unemployed do not spend. They do not pay income taxes. They don't make good on debt. So the cycle is vicious. As their morale drops so does the revenue that the government at every level collects because low incomes mean low taxes. And no spending means no sales tax revenue. If we are going to "spend money to make money" (the hidden premise behind all of the bailouts and interventions) we should spend it on creating jobs.

Let's take $100 Billion and put it toward construction projects to update bridges, expand airport runways, enhance rails for the railroads, build solar and wind energy centers, retrofit economically inefficient power plants, repair prisons and schools and so forth. These aren't makeshift jobs, they are the stuff that government ought to be underwriting on a perpetual basis. This kind of expenditure is guaranteed to give back. It employs people in real jobs that produce real results. The income the people receive is paid back in part through direct income tax revenue. It is further paid back through indirect tax revenue (the sales tax people pay when they spend their earned income), it underpins strength in our banking institutions as mortgages get paid in higher numbers and people bank their savings for the future. It generates faith in a better tomorrow which will stem the tide of investors jumping ship and killing the equity markets.

This is not a new idea. Roosevelt had it and Congress enacted it in 1932. If we can't learn from history we are doomed to repeat it. This is a case where something was done right and we are unwilling to learn that lesson. Are we destined to relive the depression that gave rise to the WPA? We have an opportunity to avert that eventuality, if only our leaders could see the picture from multiple dimensions. Yes, save Wall Street -- but Main Street doesn't need tax incentives or other roundabout and postponed gifts, it needs the therapy of work and the the injection of pride that comes from earning one's own way.