Bush and Congress Goose Electorate with Cash -- Sustainable Economic Stimulus Ignored

Bush signs the hastily assembled $168-billion anti-recession stimulus package today. The $300-$1200 checks should start arriving just in time to help us pay for the postage stamp increase.

The bill also temporarily raises the limit on Federal Housing Administration loans to $729,750. Help me out here -- Just how much financial help does a guy need if he can afford to build a $700,000 home?

As Bush signs this deficit spending into law, his man Edward P. Lazear, chairman of the White House Council of Economic Advisors, insists that we are not in a recession right now "and we are not forecasting a recession" [Edmund L. Andrews, "White House Does Not See a Recession," New York Times, 2008.02.12].

Wait a minute -- so why are we passing an anti-recession stimulus package if there is not now and will not be a recession? Oh, says, Lazear, because it will create 500,000 additional jobs. Right. So we're adding $336,000 to the national debt per new job created. I'm not the best businessman, but if someone handed me $336,000, I could create more than one job here in Madison. (Hey, LAIC! Let's try it and find out!)

Meanwhile, Robert Reich opines in the NY Times that the normal economic remedies trotted out by Washington won't work, "because this isn't a normal downturn":

The problem lies deeper. It is the culmination of three decades during which American consumers have spent beyond their means. That era is now coming to an end. Consumers have run out of ways to keep the spending binge going.

The only lasting remedy, other than for Americans to accept a lower standard of living and for businesses to adjust to a smaller economy, is to give middle- and lower-income Americans more buying power — and not just temporarily [Robert Reich, "Totally Spent," New York Times, 2008.02.13].

Reich notes that we've put off problems by stretching our incomes. We've put women to work, which is great for equality but means we now have over 70% of households needing two incomes to get by where our parents got by pretty well on one income. We've put in more hours (almsot nine workweeks more a year than typical European workers, Reich calculates, and even mroe than the Japanese). We've put more spending on our credit cards and in home equity loans. But now we are, as Reich titles his op-ed, "totally spent."

So how do we create a permanent boost in buying power that doesn't involve living at the office at putting the kids to work, too? Reich offers three solutions:

1. "larger earned-income tax credit, financed by a higher marginal income tax on top earners"
2. stronger unions so workers can fight for better wages
3. more investment in education: "This will require, at the least, good preschools [I know, Sibby, I know -- liberal fascism], fewer students per classroom and better pay for teachers in such schools, in order to attract the teaching talent these students need."

But that takes a lot more political courage and foresight than rebate checks and circuses. (And let's have some fun with the decadent-Rome metaphor: American Gladiators won its time slot Monday.) Instead, we'll burn through our checks this summer, then come back next year having the same debates over stagnant wages and the increasing rich-poor gap. Say it with me: "failure of leadership and imagination in Washington."

*Bush photo: AP/Pablo Martinez Monsivais