Argument: Stimulus increases debt, inflation, interest rates, harms economy
Mitt Romney. "Commentary: Stimulate the economy, not government". CNN. February 6, 2009 - We're on an economic tightrope. The package that passed the House is a huge increase in the amount of government borrowing. And we've borrowed so much already that if we add too much more debt, or spend foolishly, we could invite an even bigger crisis.
We could precipitate a worldwide crisis of confidence in America, leading to a run on the dollar or hyperinflation that wipes out family savings and devastates the middle class.
Christopher Grey. "Opinion: Why the Stimulus Will Fail". The Street. February 9, 2009 - [the stimulus] will further destroy growth and jobs by fueling inflation and higher interest rates. The effect of the stimulus can be summarized best by reversing and paraphrasing Winston Churchill's famous statement regarding the Battle of Britain, "Never in the field of human conflict was so much owed by so many to so few."
What does that mean? Put simply, that the stimulus will harm most Americans who have jobs, own businesses, pay taxes, and save money. That's what happens when you create an environment of rising interest rates, higher inflation, declining currency value and enormous future government debt to repay. The recent deficit projection for 2009 is nearly $3 trillion and will probably end up higher than that because of lower tax revenues and higher government expenditures.
Stephen Dinan. "CBO: Obama stimulus harmful over long haul". Washington Times. February 4, 2009 - President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
Matt Geraghty. "Economic Stimulus or Economic Boomerang?". Financial Sense. January 27, 2009 - We are all familiar with how a boomerang works. It is a weapon of great power when used properly. However, when thrown carelessly it can turn on you. Instead of hitting its target it comes back to harm you. In this regard, the economic stimulus package is like a boomerang. If implemented properly, it may be a powerful weapon in fighting the current financial crisis. If implemented carelessly, it will make a victim of us.
The economic stimulus package is essentially an enormous debt offering by the U.S. Government with the goal of using the money to create value in the economy. We need to remember that the simple act of transferring money from the Government to citizens or civil projects does not, in itself, create any value. In fact, if the money is used wastefully, it will actually destroy long-term wealth in the U.S. In this case, it will not be a solution to our economic crisis, but a new financial burden. Without strong measures to ensure that the stimulus is used for value-creating programs it will most certainly only result in a short-term boost to economic growth. We will then be left with more debt, and little to show for it. The value of the economic stimulus package will depend on how the money is used and managed.
Representative Eric Cantor. "Commentary: Big risk in Obama's economic stimulus plan". CNN.com. January 18, 2008 - Specifically, we want to keep the stimulus bill -- as well as all other future economic "rescue" measures -- limited in scope and transparent.
Our country has no other choice. The Congressional Budget Office (CBO) issued a sobering report that this year's deficit will likely climb to over 8 percent of U.S. gross domestic product, or $1.2 trillion. That's higher than at any point since World War II -- and those figures don't even account for the forthcoming stimulus.
Such heavy borrowing runs the risk down the line of rampant inflation, which scares away foreign capital while making the purchasing power of the dollar weaker for American consumers.
While deflation may be the more immediate threat that the Federal Reserve and Treasury Department are correctly focused on, uncontrolled spending and borrowing could easily necessitate much higher Treasury interest rates to keep foreigners financing our mounting debt.
Especially given the looming entitlement crisis, this poses heavy danger for businesses and families alike.
Let's not lay the groundwork for future financial catastrophe. Let's lay it for future growth. The stimulus can do that by focusing exclusively on strengthening businesses, boosting job creation and lifting consumer confidence.
"Curb America's debt culture". Christian Science Monitor (editorial). February 10, 2009 - To jolt the economy and end a recession born out of too much homeowner debt, Congress and the US Treasury this week plan to take on at least $1.1 trillion in new national debt. This "good" debt will be thrown at "bad" debt, in Keynesian logic. It's not really a Ponzi scheme. But that's true only if it works.
At the very least, the expected stimulus of some $827 billion and a new bank rescue of $350 billion will serve as a safety net to keep jobless Americans and the economy from sinking further. Some $50-$100 billion, for instance, is expected to go for mortgage relief.
But it is a leap of faith, even among Keynesian economists, that throwing money into a debt-ridden economy will thaw frozen credit markets and revive the kind of entrepreneurial risk-taking that creates jobs. Meanwhile, it takes little faith to see the debt costs of that leap.
This year, the federal deficit in spending, as a percentage of the gross domestic product, will be the highest since World War II. The total federal obligations for future spending is $56 trillion, or $483,000 per household. Much of that debt commitment is for Medicare. At the same time, Americans still owe about $14 trillion on mortgages, credit cards, and car loans – more than the US economy produces each year.
As lender of last resort, the federal government can live with a large "debt overhang" when others who live beyond their means cannot. It can rely on taxpayers, the dollar printing press, and, for now, foreign countries willing to buy US Treasuries. But this latest spike in national debt should finally force Americans to accept that they and their government must lick a chronic addiction to debt.