Stimulus with a Carnegie approach

The author of recent editorial from the New York Times calls for another bolster of federal economic stimulus. He sites the weak and fragile progress the economy has made on account of immense stimulus spending. While I agree that the government cannot sit on its hands and pray that the economy continues to heal, I don’t agree with that we can ignore the repercussions of another immense stimulus package.

The federal government is already feeling the burden from the current debt as shown by record low Treasury bill values, and more debt could only make matters worse. The author shrugs off the long-term consequences saying, “The immediate need for stimulus trumps the longer-term need for deficit reduction. A self-reinforcing stretch of economic weakness would be far costlier than additional stimulus.” With every passing second the federal debt is rising, and that is essentially because the government is spending money it doesn’t have. The way the government obtains that money is by selling treasury bills (a short term loan in essence) to either other countries or investors, but each time the government sells a treasury bill, the value of future treasury bills decreases. Thus, if the government continues deficit spending, it becomes exceedingly more difficult for the government to pay for programs in the future, because the amount of debt that each additional expenditure creates continually increases. So with this giant debt that we have already, and the value of treasury bills at record lows, do we really want more immense spending? I am not an economics expert, but I do know that the most recent stimulus packages cost immense sums of money and I hear Washington talk about more giant sums of money everyday for various efforts. As a young person, even I fear that my grandkids could still feel the effects of this debt. But, since I agree the government has to take some action, we have to attack the problem of the national debt as well.

In order fix be able to fix the problem of national debt, I see no other way to attack the problem but by the same way Andrew Carnegie attacked his budget deficits—cut costs, and when you cannot cut anymore, cut again. While the federal government may need to be more careful and gentle when cutting spending, it needs to be done. Even the giant and powerful American government has its limits. Right now, we are trying to fight wars abroad, stimulate our economy, institute national healthcare, along with sponsoring all the other thousands of social programs, down to the most basic amenities such as the police, fire rescue, and the judicial system. We need to focus our priorities, so I believe if we follow a similar model to Andrew Carnegie and cut where we can. We can stimulate our economy without having to force our future generations to pay our bills, literally.

BM

http://www.nytimes.com/2009/10/27/opinion/27tue1.html?ref=opinion