Federal stimulus should carry long-term benefit
Published 3:15 pm Monday, April 14, 2008
If you’re sending the IRS a check today, at least you can take solace knowing that an “economic stimulus” check will be coming your way next month.
But according to various polls, that solace probably won’t translate into much stimulus. Rather than spending their modest windfall, as Congress and the Bush administration intended when they crafted their $168 billion package, most Americans plan either to save it or use it to pay down existing debt. Such utterly responsible behavior won’t come close to giving this laggard economy the kick it needs.
Hiring is down, prices are up (except for homes) and retail sales are flat. The Federal Reserve has aggressively cut interest rates, yet inflation fears have kept mortgage rates from falling. The subprime mortgate meltdown has home foreclosures at record highs. So it’s no surprise, especially in an election year, that politicians from both parties are calling for the government to do (read spend) more.
If the first round of rebate checks isn’t going to do the job, though, a repeat of that strategy probably isn’t prudent. Neither is an idea floated by Democrats and a growing number of Republicans: to have the government help lenders write down existing home loans, lowering interest rates for borrowers on the edge. Sorry, but those who made the riskiest loans, and the borrowers who signed up for a home they should have known they couldn’t afford, haven’t earned such a break — especially one funded by Americans who chose to be prudent, not reckless.
If another stimulus package is inevitable, it should be pumped into a strategy that will create jobs immediately and have a substantial, long-term benefit: rebuilding the nation’s decaying infrastructure. Gov. Chris Gregoire, who is among governors pushing Congress and the administration for such an investment, says Washington could put it to use right away on 156 water and sewer projects worth $350 million and 29 transportation projects worth $75 million, all of which have already been designed and permitted. All they lack is funding.
The short-term payoff is in construction and other jobs related to the projects, sparking local economic activity. The long-term benefit is the economic growth such infrastructure encourages.
Gregoire had it right when she said, “We need a stimulus package that generates paychecks, not a single check.”
In other words, one that might actually work.
