Saturday, February 7, 2009

What Goes Around, Comes Around

By Alan Caruba

The cliché, “What goes around, comes around”, will prove its worth as the abortion known as the Democrat “Stimulus” bill begins to fail of its own dead weight to stimulate anything more than a larger federal government capable apparently only of devaluating the U.S. dollar while piling more debt upon debt on you, me, our children and grandchildren.

How difficult is it to understand that, if you are deeply in debt, you cannot spend your way out of it, even if you have a machine that prints paper money?

As Alyssa A. Lappen, a former senior fellow of the American Center for Democracy, former senior editor of ‘Institutional Investor’ and other magazines, and a former associate editor of ‘Forbes’, pointed out in a commentary on, “While the bill will vastly increase the federal government’s reach, it is noteworthy that the government has never profitably managed a single enterprise.”

She noted a few government failures, starting with the mortgage giants, Fanny Mae and Freddie Mac, two “government sponsored enterprises”, the Federal Reserve Bank, and the U.S. Postal Service. Is there anyone left who does not know that the Social Security, Medicare, and Medicaid systems are insolvent? Also insolvent, noted Lappen, “are 40 out of 50 States…”

So, while the Democrat majority in Congress is rubbing its hands in anticipation of political power based on massive handouts of public funds, when the “stimulus” does not reverse job losses in a year or so, these same folks will be loudly shouting “you’ve got to give it time.” If they had done nothing at all, this recession would on its own have played itself out in anywhere from six to eight months, maybe a year. This is the normal cycle for these financial events.

Now there is literally no end in sight for the recession along with the possibility it will hemorrhage into a full-fledged depression.

As the Wall Street Journal pointed out, one trillion dollars is about one-third of annual U.S. government spending and 13% of the U.S. economy. It is more than the GDP of all but twelve nations in 2007. It is roughly one-sixth of the entire outstanding U.S. federal debt held by the public and one-tenth if you factor in intra-government debt such as Social Security IOUs.

The Democrats will argue that every $1 dollar injected into the economy will yield 1.5 times that in greater output. It is an utterly false assertion that assumes that the government can, as the Wall Street Journal put it, “create wealth out of thin air.”

The stimulus bill will, in both the short and long term, come back to bite the Democrat Party and President Obama. In the long term, your great grandchildren will still be paying it off.

In the meanwhile, $18.5 billion (based on the ever-changing figures in the bill) will be spent on “energy efficiency and renewable energy programs. Another $2.4 billion will be set aside for “demonstrations of how to safely remove atmospheric greenhouse gas” but the catch to that is that the Earth is cooling and carbon dioxide plays almost no role whatever in either a cooling or warming cycle. In short, more than $20 billion will be utterly and totally wasted.

A classic example of why the stimulus bill, before it is signed into law by President Obama, will fail is the $1 billion allocated to Amtrak. In 1971, the National Railway Passenger Corporation was a federal government rescue of the former Penn Central. Amtrak has never shown a profit in the past thirty-eight years.

If the economy and, indeed, the United States, can survive the massive wastefulness of this bill, another bill will come due for the Democrats and President Obama. It will be a political one demanding they explain why, other than greed, arrogance, and the pursuit of power, they foisted this monstrosity on Americans?

How soon will that be? As soon as the unemployment figures, around 7% at this writing, fail to come down and, in all likelihood, increase. Six months? A year? By the 2010 elections?

A population that, throughout the 1990s, managed to borrow more and spend more than they could afford, is inclined toward instant gratification. The polls already show that a significant majority of them, having sobered up, do not like the stimulus bill. In a year or so they are going to dislike it even more.


libertyforusa said...

Well stated Alan!

No financial institution would honor any individuals promise to pay with such an enormous debt ratio.

No responsible parent would ever saddle their kids with their own debt in this manner.

It makes absolutely no sense to be doing this, and the legislators know it!

This can only mean they are counting on the level of ignorance in the public, to exceed the level of knowledgeable public, and if enough of the "not sure public" can be deceived than they figure they have covered themselves!

If our founding fathers are watching this they must be disgusted!

Alan Caruba said...

Thanks. The nation either "grows up" and acts in a mature fashion or it will eventually pay the piper. The stimulus bill is a step in the wrong direction.

libertyforusa said...

The frustration of the current situation with liberals appearing to be far more organized in engineering our demise as a free society has bugged me for a while.

I may have found what I was looking for in a new site started on 20 January,2009

I wrote about it on my blog here.

I liked what I read, and following the contact links informs one that this site was started by an investment capitalist with a diverse background.

I wondered when business people would begin to fight back!

Please visit the site I write about ( and add to your links if you agree with the counter insurgency surge strategy he outlines. I do- and am recruiting like minded individuals to the site!

Nonin Stone said...


As always, a good column.


Thanks for the link. I agree: we need to fight this insanity.

To all,

I am outraged that there are, indeed, some Americans so ignorant, including President Obama, and insulted that ANY politician would think the rest of us so stupid as to believe prosperity could be restored by government taking OUR money, paying itself for the effort, then handing what's left back to us.

We have been presented the audacity of hoax.