Dan

Calabrese

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February 10, 2009

It’s an ‘Emergency,’ Is It?

You probably didn’t know that all professed concerns about budget deficits cease to apply when we have an “emergency.” Let’s define an emergency:

When Democrats have not had real power in Washington for 14 years, and their favored core constituencies have had to get by on less than their full preferred share of federal largesse throughout that time, it’s an emergency!

That, of course, is not what President Obama, congressional Democrats and weak-kneed Republicans mean when they talk about an emergency. They’re talking about the supposed economic crisis – so severe, so unprecedented, so potentially devastating that if we don’t act and act now it might plunge us into an economic morass from which we would never recover.

That is why we must disregard all concern for fiscal responsibility. That is why all questioning of this monstrosity is nothing more than partisan nitpicking. That is why the handful of rudderless Republicans who have agreed to countenance this fiasco are lauded as “patriots” by the president who is sick of patriotism being used as a political weapon.

It’s an emergency!

But the “emergency” requiring the boondoggle “stimulus” of somewhere between $750 billion and $1 trillion is surely not the economy. The economy is bad, but it’s been far worse, and the fact that it has gone into a recession – even a severe one – can scarcely be described as an emergency. It is an unsurprising and natural occurrence within normal economic cycles.

Consider: In 2000, the Gross Domestic Product of the United States on a per capita parity purchasing power basis was $33,900. It declined briefly in 2001, then grew steadily throughout the presidency of George W. Bush (bet you didn’t know that) until it reached $46,000 in 2008. That’s right. The size of the U.S. economy grew by nearly 40 percent over the past eight years.

It has now declined by about 3.5 percent in the past two quarters. Yep, that’s a recession according to the classic definition, and it means that the economy is now about 37 percent larger than it was in 2000 as opposed to 40 percent larger.

That’s an emergency?

Of course, employment grows as an economy grows, and when the economy shrinks, people who had counted on those new jobs start to lose them, and that becomes a serious problem for them. It is also true that many of these people made large purchases on over-extended credit, and honesty compels one to acknowledge that too-easy credit was one of the drivers of the economic growth we experienced over the past decade.

Today unemployment is rising at a disturbingly fast rate, but to some degree that is because it started at such a low rate. Unemployment today is still lower than it was throughout most of the booming 1980s.

This is not an emergency. We are not going to fall into the abyss if “nothing is done,” but at any rate, there is no chance that nothing will be done. Plenty is already being done. People are adjusting their financial planning, spending and saving habits. Companies are adjusting their business models. People are re-assessing their career models. Housing prices are dropping to reflect the realities of a market with more rational credit policies – thus making houses more affordable for people who plan to buy for the purpose of living in them, not to “flip” them or borrow money against their imagined “equity.”

Plenty is being done. Plenty is always done during an economic correction. As such, there is really no reason for the federal government to “do something,” and certainly not for it to further over-extend its own out-of-whack asset/liability balance.

There are real emergencies that compel the government to spend whatever it takes to address the problem, and to deal with the budgetary implications later. For instance, a national security threat may require a military action for which money has not been budgeted. In that case, you spend what you have to spend. That’s a real emergency. I don’t seem to recall Democrats accepting the it’s-an-emergency argument when this happened during the George W. Bush Administration, when the economy was expanding rapidly and had the ability to cover the costs of the emergency expenditure.

But that was then. This is now. When you build your entire power proposition on your willingness to bankroll favored constituencies, and they’ve been cooling their jets for 14 years waiting for an influx, you, my friend, have got an emergency.

But it’s a political emergency, not a real economic one. And the people who are enabling this fraud are no patriots.

© 2009 North Star Writers Group. May not be republished without permission.

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