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Nov. 6, 2009
Rabbi Berel Wein: Choosing to hear
JWisdom.com Zero to 1/60th: How to Empower An Hour with Gavriel Aryeh Sande (7 minutes)
Caroline B. Glick The mullahs' big week
Suzanne Fields A Fallen Wall for Fallen Man
Nov. 5, 2009
The Kosher Gourmet: Three scrumptious -- but simple -- butternut squash dishes
JWisdom.com Hidden Hints: Unlocking Faith & Prayer with Rabbi Jay Yaacov Schwartz (10 minutes)
Nov. 4, 2009
Tom Hamburger and Kim Geiger: Should prayers be covered?
JWisdom.com When God played peacemaker With Rabbi Sroy Levitansky (5 minutes)
Nov. 3, 2009
Martin Peretz: Beware, Barack. Beware, Rahm. Beware, Axelrod
JWisdom.com Are you are closet idolater? With Sara Yoheved Rigler (10 minutes)
Nov. 2, 2009
Paul Greenberg: The Holocaust is now on Facebook
JWisdom.com Abraham's Strange Change With Rabbi Yitzchok Fingerer (5 minutes)
Oct. 30, 2009
Rabbi David Aaron: Secret to Immortality
Caroline B. Glick Silencing dissent in America
Oct. 29, 2009
Lini S. Kadaba: Do tactics avert flu or reduce humanity?
JWisdom.com We Must Revamp our Religious Vocabulary With Gavriel Aryeh Sanders ( 10 minutes)
Oct. 28, 2009
Rabbi Yonason Goldson: Atheists in Bubbleland
JWisdom.com Why what we wear impacts who we are With Rabbis Mordechai Becher, Menachem Golberger and Aliza Bulow ( 10 minutes)
Oct. 27, 2009
Paul Greenberg: The United Nations Is Outraged Again, Or: Department of Mideast Static
JWisdom.com The Science of Love With Rabbi Jonathan Rietti ( 7 minutes)
Oct. 26, 2009
The Jewish Ethicist by Rabbi Dr. Asher Meir: Damaging disclosures with a twist
JWisdom.com Wisdom and Wonks With Rabbi Eytan Feiner ( 7 minutes)
Oct. 23, 2009
Rabbi David Aaron: Are you ready for the ultimate pleasure?
JWisdom.com Watermark and oneness with Rabbi Sroy Levitansky ( 4 minutes)
Caroline B. Glick Stop using limited powers in a way that expands our enemies' advantages over us
Oct. 22, 2009
Steven Emerson: Terror Cases Share Desire to Kill Americans
JWisdom.com No More More Family Fights --- Really? By Sarah Chana Radcliffe ( 5 minutes)
Oct. 21, 2009
Tonya Alanez: Holocaust denier sues survivor, calling Auschwitz memoir 'vicious lies'
JWisdom.com Meditating Jewishly: A Panacea for Success by Sarah Yoheved Rigler ( 7 minutes)
Oct. 20, 2009
Dennis Prager: Obama and Dalai Lama: Why Israel Worries about U.S. President
JWisdom.com Abraham was not religious By Rabbi Yitzchok Fingerer ( 6 minutes)
Oct. 19, 2009
JWisdom.comWhy Good People Do Bad Things By Rabbi Eytan Feiner ( 7 minutes)
Oct. 16, 2009
Rabbi Yonason Goldson: The Perfect Number
JWisdom.com Hearing Voices By Rabbi Sroy Levitansky ( 5 minutes)
Caroline B. Glick How Turkey was lost
Oct. 15, 2009
Jeff Jacoby: Peace vs. the 'peace process'
JWisdom.com: Former MTV producer and stand-up comedian Rabbi Lawrence Hajioff: Taming a Control Freak (A VERY fast 15 minutes)
Oct. 29, 2003
Mortimer B. Zuckerman: Graffiti On History's Walls (MUST-READ!)

Jewish World Review Dec. 11, 2008 / 14 Kislev 5769

Obama's stimulus plan won't stimulate

By Dick Morris & Eileen Mc Gann


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http://www.JewishWorldReview.com | The economic stimulus plans unveiled by President-elect Obama over the weekend won't do much to help the economy. But they will vindicate all the dreams of liberal Democrats for higher government spending.


Of course, the basic choice facing any politician seeking to stimulate a moribund economy is whether to catalyze the supply side with tax cuts on business or the demand side by way of spending increases. Obama obviously made that choice years ago: He will work the demand side.


But once a leader makes that decision, he faces another: Will he emphasize important and valuable public works projects or will he just try to pass out the largest amount of money possible? By announcing that he is not "going to throw money" at the economy in the hopes of getting a pulse, Obama signals that he will stress the former approach and fund important public works such as school reconstruction, fiber optic cables, alternative energy generation and the like.


The problem is that such projects take a long time to plan and longer to build. Their immediate economic impact is highly attenuated.


In all federal capital projects, only about one-quarter of the funds appropriated are actually spent in the fiscal year. It just takes that long to plan, engineer and begin construction. And for every $6 spent in the last stimulus package, only $1 actually got spent on goods or services. Five dollars out of every six in the Bush stimulus package of 2008 went to pay down debt, mortgage or credit card or student loan or home equity, and not into the acquisition of new products or services.


So, do the math. If only 25 cents out of every dollar actually is spent in the fiscal year, and only one-sixth of that sum actually gets spent by the workers who get paid on new goods and services, only about 4 cents from every dollar actually stimulates the economy. And who says those 4 cents will be spent on domestically produced products? A lot of the stimulus will just feed Chinese imports, particularly with their low prices.


FDR faced just this problem in combating the Great Depression. In the National Recovery Act (NRA), Roosevelt set up the Public Works Administration (PWA) headed by Interior Secretary Harold Ickes (the original one). Ickes was a stickler for making sure nothing was wasted and in keeping the costs down. He managed a spectacularly successful public works program and built, without scandal or corruption, some of our most important national infrastructure. But he took his sweet time doing so. The economic stimulation was slow in coming.


Exasperated, FDR did an end-run around Ickes and set up the Works Progress Administration (WPA) under Harry Hopkins. WPA spent its money quickly and on projects involving little overhead or preparation. My mother got a WPA job teaching English to foreigners. Virtually all the WPA funds were spent in the fiscal year and the stimulative effect was immediate.


But in opting to go the Ickes route, Obama will find that he leaves a legacy of important contributions to our national infrastructure, but little in the way of real economic stimulation.


While a WPA-type approach might hasten the ameliorative impact of the stimulus package, Obama still faces the conundrum that most of those who get extra paychecks as a result of his spending will use the money to climb out of debt. In the '30s, credit cards didn't exist and consumer debt was very limited. Most people lived paycheck to paycheck. Extra money equaled extra spending. But now that most consumers will use money to pay down their debts, not to spend it, demand-side stimulation has its limitations. But Obama's ideology won't allow him to indulge in tax cuts "for the rich," which might work to get us out of the depression faster.

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.


JWR contributor Dick Morris is author, most recently, of "Fleeced: How Barack Obama and Hillary Clinton, Media Mockery of Terrorist Threats, Liberals Who Want to Kill Talk Radio, the Do-Nothing Congress, Companies ... Are Scamming Us ... and What to Do About It". (Click HERE to purchase. Sales help fund JWR.) Comment by clicking here.



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© 2008, Dick Morris

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