A little over a year ago as President Obama assumed office he was inheriting the country in the worst possible shape any President in history has had to face, save perhaps Lincoln and F.D.R. There were many who thought that the financial system was on the brink of complete collapse. With home prices shooting down as the housing bubble continued to burst, the majority of economists were in agreement that some type of government action was needed immediately. President Obama signed the American Recovery and Reinvestment Act into law early in his Presidency to address the crisis and to try many of the suggestions that economists had put forward. There were critics on both sides. In fact many liberals claimed that the amount of money spent in the stimulus was too little and as such the recovery would take longer. But criticism from the other direction has taken on a far darker tone in the months since President Obama signed the Act into law.
The Tax Day Tea Party started as a direct response and criticism of the American Recovery and Reinvestment Act. With those participating in protests thinking it was a cheap easy way to voice themselves by sending tea bags to those members of Congress who had voted for the bill. This, at the time, seemed like a harmless and peaceful enough way to express dissent. And it should be noted that at this point the Tea Party had a legitimate philosophical beef with government. They believed that government funds should not be used to prop up certain sectors of private industry; that instead those failing should just be allowed to fail. However, in the months after the stimulus was passed as the national debate turned towards Health Care the Tea Party became an active dissenting group in what has become a much more radicalized and at sometimes violent right wing faction of the Republican party.
It is therefore worthy of discussion on whether or not the Tea Party was correct in their philosophical disagreement that the stimulus would actually hurt the economy, as the Tea Party is once again using the same stimulus arguments and rhetoric against the recent passage of the Health Care bill. What we do know at this point is that the stock market has been up record percentage levels since the stimulus was signed. Job losses are down dramatically compared to what they were before the legislation was passed.
What most people do not realize is that the stimulus was not designed to throw all the money into the economy last year. It is spread out over a number of years to make sure the economy first stabilizes and then begins to grow and create jobs. And judging by that yardstick the stimulus is working exactly as planned. Job losses have slowed and while those reductions in losses have occurred the stock market has bounced back dramatically. So what does that tell us? While the job creation has not begun the economy has stabilized. So the first part of the stimulus has done its job. Over the next two years if job creation begins it can be inferred that the stimulus worked and that it did save the U.S. economy from the brink of disaster.
Another Tea Party complaint was bailing out the banks. Well, the Tea Party should take note that right now plans are being made to sell the government stake in Citigroup…at an 8 billion dollar profit. You read that right 8 billion dollars. In one year that investment by the tax payers is going to pay dividends and show that those banks that do create jobs, loan money for families to buy homes, loan money to help small businesses and play a key role in job creation will allow the taxpayers to profit quite largely from the government investment through the stimulus. How can anyone argue that an 8 billion dollar return over the course of one year was a bad use of taxpayer funds?
Keep those numbers in mind as we begin to hear the empty rhetoric from the Tea Party in the months following the passage of the Health Care bill. Rest assured this publication will be looking back as time goes on to assess the impact of the legislation and which groups assumptions and arguments prove to hold true and which groups arguments prove to be empty rhetoric.
