New stimulus bill also comes with no guarantees

Published 12:00 am Sunday, February 8, 2009

The rush in Washington for the new Congress to do something about the economy will have consequences in Mississippi.

The rub is that no one can say for sure whether, on balance, adding debt will provide the spark that commerce is believed to need.

Thad Cochran and Roger Wicker, the two Republicans Mississippi voters sent to the U.S. Senate stood foursquare against the package President Obama wants to sign as soon as possible.

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The state’s House delegation was split when the bill passed 244-188 with a price tag then guesstimated at $819 billion on Jan 28. Freshman Rep. Gregg Harper of District 3 joined his fellow Republicans in their unanimous opposition. They were joined by 11 Democrats, including Rep. Gene Taylor of District 4. Freshman Rep. Travis Childers of District 1 and Rep. Bennie Thompson of District 2 joined their follow Democrats who have a commanding majority in the chamber.

The amount of money in the House version should not be considered by the fainthearted.

• It could fund all Mississippi general fund operations at twice today’s levels until the dawn of the next century.

• To fight the Great Depression, Congress gave President Franklin Roosevelt $4.9 billion in 1935 in the Emergency Relief Appropriation Act. Even after adjusting for inflation, the recovery legislation sent to the Senate would spend more than a dollar for every dime Roosevelt spent. And by the time the piling on ends, the total might be two dollars per “New Deal” dime.

• The new bill, added to those already passed, would complete a tripling of the federal deficit to $12 trillion from $4 trillion when former President George W. Bush took office a mere eight years ago.

• If distributed as cash, each man, woman and child in America would get $2,730.

Of course, whatever the final total is won’t be distributed as cash. It will be added to the unofficial charge card each American now carries. From $23,800 per person owed in 2000, the new per-capita debt will be almost $40,000.

Staggering numbers aside, there are other considerations.

Gov. Haley Barbour told the Wall Street Journal that cash directly allocated to Mississippi to cover state shortfalls this budget year or next budget year wouldn’t really be doing the state any favors.  “A lot of this is just crazy,” Barbour is quoted as saying. “I’ll tell you what I told (Obama) in front of 45 governors. Don’t give me $400 million of one-time money and make me spend it on recurring expenses. I’m better off not to get it.”

The statement reflect’s Barbour’s long-held view that governments, like people, should learn to live within their means during boom and bust cycles. It does not reflect a belief that federal money is bad for states. After all, Barbour wrested billions more from Congress for Hurricane Katrina rebuilding than had ever been provided for civilian relief. And, in the same article, Barbour indicated “infrastructure” money could be a good thing. “The idea of long-term capital improvements is a lot better than just giving every state a blank check, ” he said.

The over-arching question is, given the existing debt, whether any infusion of any amount of borrowed money will jolt the economy back into a more normal rhythm.

As Rep. Harper sees it, when a person in a hole wants to get out a good first step is to stop digging.

As economists who follow the famed John Maynard Keynes see it, government controls, such as setting interest rates, deciding what to tax and how much and funding public projects are effective tools to use in managing and stabilizing private economies.

Keynes died in 1946, so he can’t be asked what he would do given the exact factors in play today.

Adam Smith, often called the father of modern economics although he was more of a philosopher, died before Keynes was born. He would say a hands-off approach would be best, believing an “invisible hand” would eventually set the economy on a better course.

Congress today is not composed of scholars who will spend much time poring through books by Keynes or Smith.

They are facing a political imperative to take action and because spending money is an action they can take, that’s what will be done.

In Jackson, the Legislature seems to be on hold to find out how much money is in the legislation and how much they can use to sustain or expand their spending. It will take the pressure off them for a year, maybe two.

The legislation could also put more Mississippians back to work, make education affordable and lead to renewed prosperity. Or the effect could be negligible, except to increase the deficit.

That’s the rub. It’s a lot of money — and no one knows.


Charlie Mitchell is executive editor of The Vicksburg Post. Write to him at Box 821668, Vicksburg, MS 39182, or e-mail