Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Thoughts on the Stimulus | February 4, 2009

In no particular order:

1. There’s no doubt it’s necessary. The economy is in rough rough shape and needs a steep infusion of capital to get us out of this rut. Another 3 million jobs are expected to be shed through 2009, and the recovery, when it begins to happen will be sluggish at best. Government spending can and does create jobs. The CBO just released their latest report, stating that approximately 80% of the spending would occur within 24 months, meaning the money will hit the system quickly.

2. It’s a good thing the money will be spread over time. We’re going to need new jobs in 2010 and 2011 just as badly as we need them now. Spending it all at once wouldn’t necessarily be a good thing.

3. Once we do begin to pull out of the recession, the Obama administration will have to keep a careful eye on inflation. There will be a lot of dollars sloshing around out there in a couple years, and we don’t want to swing from one extreme to another.

4. Republicans will probably end up coming around to support the final version of the bill. Obama is working hard to include some of the provisions Republicans are looking for (i.e. elimination of spending on contraceptives and increased tax cuts for small businesses), and the quibbles are now down to a few items. I don’t think Republicans want to risk getting labeled as against a recovery program, particularly if the economy is recovering by 2010. The R’s have been hammered in two straight Congressional cycles and I don’t think they’d like to make that a third.

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Posted in Economy

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