Waiting, and waiting, and waiting for stimulus money to be spent on something that's actually stimulative
CNNMoney published a great update on the much ballyhooed "stimulus" package today.
- Since it was passed ten weeks ago the government has released approximately 10% ($75 billion) of the $787 billion package.
- Of that $75 billion that was made available, only $14.5 billion has been spent so far.
- That means that only 1.8% of the total stimulus money has been spent since the package was passed ten weeks ago.
- But wait, it gets better. $13.2 billion of the $14.5 billion that has actually been spent has been given to states to help with the rising cost of Medicaid.
So basically nearly a quarter after the package that is going to save the economy was passed 0.165% of the allocated money has been spent on anything remotely simulative and that's only speculation about where it actually went. Who knows what they did with it.
Of course, the "Making Work Pay" tax credits have started to kick in. That should help some, but we're talking about $10 per week or something like that and Congress has already indicated that it will not extend it after its scheduled expiration at the end of next year. A miniscule, temporary tax credit is not the solution to our economic problems.
Liz Oxhorn, a press secretary for Vice President Joe Biden is quoted in the article as saying "We're ahead of schedule and making steady progress...We're pleased."
I've said it a million times before and I'll say it again. This package stinks and it definitely is not the key to getting us out of this mess. Even if the government had spent as much money as possible as quickly and efficiently as possible, which we all know would never happen under any administration...Democratic or Republican, the velocity of money would still be falling fast enough that we will likely get sucked into a deflationary vortex in the short run.
In a perfect world where we had a nice surplus, like China does, this government spending would probably be better than nothing. In order to have a surplus though you have to actually make something of value rather than just be a voracious consumer.
When we literally have to print and borrow every single dime that is spent, the future tax burden and possible negative impact upon the U.S. dollar might eventually end up being worse than what we would have experienced if this inefficient, pork laden, pet project package had never been passed at all. We're robbing Peter to pay Paul. While the impact of a massive federal deficit might not be felt for several years, there's no such thing as a free lunch. Eventually the chickens are going to come home to roost. Time will tell what is going to happen, but while I don't think that we're all doomed we are going to experience an extended period, several years, of slow to no growth in the U.S.