Too Much Too Soon?

“Too much too soon” is increasingly the cry of those who like the status quo, and they have succeeded in raising doubts in the minds of some who don’t necessarily like the status quo, but who have been impressed with the argument that dealing with the economy should be first, foremost and the sole concern, and are frightened by the projected deficits.

Their concern is understandable but misplaced. First of all there is a basic principle here and it applies not only to government debt, but to private and business debt as well, and that is that borrowing to meet daily expenses over time, is a recipe for disaster. But borrowing for capital expenditure is not only wise but a necessary part of assuring the future. A business that does not borrow in order to be able to purchase more efficient equipment is doomed to fail in the the competition of the market place. The US is now in a position of such a business. It must modernize, and borrowing for that purpose is a legitimate and necessary exercise. Investing in an efficient health care system, in education and in stopping the inexorable advance of global warming by reducing noxious particles in the atmosphere, which incidentally also effect health, are investments that will pay dividends may times over. They are investments. they are not expenses.

Dealing with the economy requires action on many fronts, from dealing with the banking crisis, to regulatory reform. But a large part of it is to stimulate the economy by way of injecting government funds to grease its gears.

There are many ways to do this. We can give tax cuts to those who are fortunate enough to still have an income, in the hope that they will spend the money, thereby creating demand, which has fallen drastically in this recession. The enacted Stimulus Bill does this. However, this may or may not be effective, because past experience has shown that in a time of anxiety people spend as little as possible, and if they unexpectedly have an increase in their income, they tend to save it or pay of debts. Nevertheless, it is part of the package.

Spending, however, in ways that create or save jobs is far more effective because that puts money in pockets that might not have enough for the necessities of life, and when the means to meet basic needs becomes available, it will be spent. But this can be accomplished even without creating jobs, for we can pay extended unemployment insurance, and the bill provides for this, or we can create useless jobs which is better than simply distributing cash, if for no other reason than that people have far more self-respect when they are “gainfully” employed.

But as I set forth in my essay entitled The Stimulus Bill, we can get the greatest gain for the buck when we employ people to do useful work, because here we have a huge multiplier effect. I cited how even doing something as mundane as reseeding the Capitol lawn can have a very good multiplier effect.

But even better then seeding a lawn, are things that have a really long lasting benefit, such as repairing our infrastructure and improving it. The highway system built by the Eisenhower Administration has served the nation well for all these years, but it is now antiquated and in desperate need of repair. When bridges are falling down, it is obvious that something needs to be done, even if the stimulus were not needed.
But we can no longer depend entirely on highways and airplanes to meet our transportation needs. Most of our competitors in the industrialized world are well ahead of us in having high-speed rail. Our need for this is way overdue and the stimulus bill provides funds for getting a start on this. Unfortunately, like everything else that meets the needs of the Nation, the naysayer targeted this for denunciation, describing it as a boondoggle, for a train between Disney-Land and Las Vegas, and then going so far as to describe it as a train going to a brothel in Las Vegas. A look at the proposed train routes published by the Department of Transportation shows no such plans.

But this is not the only example of stimulating the economy and getting long-range benefits. We can get a start on Health Care Reform by immediately investing in computerizing our health records and in other aspects of Health Care Reform, which can be funded quickly. Other reforms, which may not be possible until later years, will make sense in one of two ways. If the economy has not yet recovered, the spending on such reforms will act as a needed continuing stimulus. If the economy has recovered, tax receipts will have increased and the money for such reforms will be available. But say its critics, even if the economy is on the mend, it is likely that the amount expended will not equal tax receipts, and the deficit may as a result endanger the soundness of the dollar. This is a legitimate concern, particularly if the deficit turns out to be as large as is projected by the CBO (Congressional Budget Office) rather than by the OBM (Office of Budget and Management). But what are the alternatives, to leave the present system, which is bankrupting the country in place? I am reminded of the Harry and Louise ads, which warned of dire consequences if the Clinton Health Insurance plan were adopted. All the consequences of which these ads warned, in fact happened because no health plan was adopted. As a result of the status quo our choice of providers has drastically declined, as many Insurance Companies require that we go only to in-network providers. Not only have more and more Americans become uninsured (nearly 46 million Americans, or 18 percent of the population under the age of 65, were without health insurance in 2007, according to the latest government data available, but even the insured often find that they are refused coverage when major expenses arise, with the insurance companies claiming pre-existing conditions. According to the journal Health Affairs, medical bankruptcies affected about 2 million Americans annually, -- counting debtors and their dependents, including about 700,000 children, as of 2001, and things have gotten much worse since then. “Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.” The result is not only individual tragedies, but the cost borne by our whole economy, since far too many cases are handled in emergency rooms, which is far more expensive to society, as is the lack of preventive care. Corporations, who have until now borne the cost of health insurance for most working Americans, can no longer afford it. In other words doing nothing or even delaying is not an option. It is a recipe for disaster. Whatever the risks of moving forward may be, the failure to act is not a risk. It is a prescription for guaranteed disaster.

This applies to an even greater degree when it comes to global warming. Ice caps are melting at a faster rate than anyone predicted. If nothing is done much of Florida and other areas of the US will be under water and the total land mass wiped out will cause a refugee problem that would make today’s migration seem puny by comparison.

But even without the threat of global warming the way we generate energy today, with reliance on coal and other fossil fuels, is inefficient and a threat to our national security. If we are to be competitive in the world economy, we must be in the vanguard of this development. We will be the innovators, or others will be. We will be exporting this technology or we will be importing it. We will create jobs in developing, building, and using this technology, or we will ship jobs to other countries, which have overtaken us.

Ditto for education. We have been the successful economic powerhouse, which we have been, because we have had one of the most educated workforces in the world. If we fall behind, and we have already fallen behind, we will not be able to compete on the world stage, and in a globalized economy we must, more than ever, compete.

So the question is not, can we afford to do these things? The question is can we afford not to do them? The clock is ticking! We cannot fail to act. We dare not delay. There are risks in acting. There are certain disasters if we fail to!