As you have probably gathered from my past few columns, I am very critical of the stimulus package proposed by the president. I believe it won’t do much to stimulate the economy since consumers will use the checks to pay bills and pay down debts and businesspeople will invest it waiting for better times. The rational expectations theory that is replacing strict Keynesian economics as the consensus among economists dictates that people won’t automatically spend what they get but will take into account their concerns about the future of the economy. The fact that personal savings grew in January for the sixth straight month and are now at the highest rate in six years indicates that this is what is happening.
I also worry about what happens when all that money comes out of hiding and floods the economy when confidence returns. It will usher in a year or two of horrible inflation which will require its own recession to cure as it did in 1981-2.
As I did during the election, I am working with the National Republican Trust to do what I can to stop this package from passing. They will be running ads in key states to build sentiment against it to convert conservative Democrats and stiffen the spine of the Republicans in the Senate. Please help by contributing at GOPTrust.com. If we can modify or defeat this package it will save all of us a great deal of pain and suffering down the road.
Paid for by The National Republican Trust PAC.