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Wednesday, February 18, 2009

Could We Have Just Done Nothing?

The prevailing go-to response when the stimulus bill and the various bailouts are discussed is some variation of the contention that we "couldn't have just done nothing." My response has always been to point out that this is wrong on two counts:
  1. It assumes that the only two choices involved are doing the wrong thing or doing nothing, when there are many other things that could have been done instead of the one that involved spending a bunch of unnecessary money without actually addressing the underlying issues.
  2. If what is being proposed is only going to make the problem worse, then we actually would be better off doing nothing rather than just adding fuel to the fire.
As a matter of fact, last week the Washington Post reported that the Congressional Budget Office (CBO) has determined that the debt generated by the stimulus package will actually be harmful to the country's economy over time:
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

So, maybe we weren't beyond the point where we could have "just done nothing," after all.
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