Wednesday, February 11, 2009

$838 billion. Whoa.

So how about this $800+ billion stimulus plan? Add the existing $700 billion bailout and I am very concerned we've got a recipe for disaster in the form of massive money mismanagement. My concern is fairly simple. There are only 535 congresspeople and they are vastly outnumbered by lobbyists. For each congressperson there is over 1.6 billion dollars in the $838 billion stumulus plan, but I expect most congresspeople don't directly decide how any of this money will be spent, while a few probably have tremendous power. Thus, there are probably a handful of congresspeople, each of whom are deciding--in the course of just two or three weeks--how to spend tens of billions of dollars. How is it even humanly possible to spend this money responsibly? How will it be micromanaged? How will it avoid giving enormous amounts of free money to undeserving recipients that have good lobbyists?

I like Jon Stewart's idea on the stimulus plan which he discussed with an economist on (IIRC) Feb. 2. They talked about lowering the payroll tax from 15% to 7%, an idea that (AFAIK) is not under consideration by either party, and about refinancing bad mortgages with lower interest rates. They also talked about the importance of giving not to large banks that caused the crisis, but to individuals with lesser faults--a "trickle up" stimulus plan instead of a "trickle-down-from-the-rich-bastards-who-caused-this-mess" plan. What I like about these ideas is that there isn't a lot of room for lobbyists, pork-barreling, or slipping in special-interest funding unnoticed. With fewer line items on the bill, less irresponsibility would get through. These ideas spread some of the government relief money just about equally to all citizens, and some of the money is targeted at people that need it--but at individuals who have no lobbyists, rather than banks and megabusinesses.

It also seems risky to increase the national debt by $1.5 trillion, which is about $5,000 for every man, woman and child in the U.S. The total debt after this stimulus plan will be about $11 trillion, I'm guestimating, or almost $37,000 per person. But in the U.S. money system, money is debt, and more debt means more money for everyone. Make sense? Well, to me it's a head scratcher. It seems like most countries around the world are borrowing--but who's lending? In the U.S. I assume most of the money will be "lent" by the Fed, which really means the Fed will punch some numbers in a computer to create the money out of nothing.

Now I don't really have a problem with printing money like this in a time of crisis--as long as they don't print so much that inflation gets out of control. In fact, printing money could be considered a perfectly even (if not perfectly fair) form of taxation: instead of taxing people, just print money. Then inflation decreases the value of everyone's money equally.

But instead of just printing money, the U.S. "borrows" it. But to me this seems ridiculous, when they are borrowing money that didn't exist before, from an organization (The Fed) that doesn't actually have any money in reserve. Presumably they will pay it back someday, and if so they will pay it back with interest. So my question is--and I have never seen anyone try to answer this question--who pockets the interest when payments to the Fed are made against the debt?

Update: This appears to be Obama's answer to my concerns about accountability - "a new website where citizens can track every dollar spent and every job created".

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