As I understand it, the economy is in trouble because people have stopped spending money. People buying stuff gets sellers to sell stuff and make money, and order new stuff so suppliers make money, and hire people to make the stuff so they make money, so they can buy stuff. Lather, rinse, repeat - sort of like a perpetual motion fur farm.
Leaving aside for the moment the fundamental flaws inherent in that whole economic model, one of the things that broke down in that chain is that the last guys mentioned above weren't getting paid enough money to keep up, BUT they could borrow money - against homes - to keep up, and the government and the banks loosened up the rules to make it easy to lend to them. Then they tied a ribbon around all the loans - some of them not very good - and magically declared them really good deals and resold the total package. Kind of like making sausage - really tasty as long as you don't think about what goes in to it. (more)
There's a wonderful term for this kind of phenomenon: a bubble. It's even got a song that captures just how the whole thing works.
Once upon a time the government was supposed to employ laws, regulations, and people with pins to keep bubbles from getting too big, otherwise people could get really hurt when big bubbles exploded. Alas, those ideas belonged to a time when it was possible to say with a straight face that government was a good thing, regulations could be useful (like the rules and referees that make playing a sport possible), and people expected someone to be planning and looking ahead. The people who make lots and lots of money from blowing bubbles with other people's money didn't like that though, so they worked really hard and got all of the politicians and press people to start saying those were bad things, so we stopped doing it.
Hey, who knew that houses wouldn't keep increasing in value forever, or that maybe there were other big problems hidden behind the bubble?
So anyway, here we are now, with President Passion Fingers urging Congress to hurry up and throw money at the problem. See, if individual people can't afford to go out and borrow anymore, the government will just borrow it for them in their name. (Don't look at what's happening to the value of the dollar or the national debt.)
Of course, it's not that simple to just throw money at a problem. As everyone knows, Democrats are only good at taxing and spending money; Republicans excel at making money (don't ask too many questions how they do it), and amassing more and more of it. Expecting them to agree on how to throw it around isn't too likely.
The President really likes the idea of giving money to people who are still employed and doing not too badly - he can call it a tax cut. (Tax cuts are sacred to Republicans and any time - good or bad - is the right time for a tax cut.) In fact, even as the Government is preparing to go further into the hole, the President and the Republicans who want his job are promising to do everything in their power to dig the hole deeper by making his tax cuts for the wealthy permanent.
I'm sure you or I would have no trouble going to a bank and getting a loan to pay bills because we've gotten maxed out on credit, don't plan to cut back on unnecessary expenses * - and can tell the bank "BTW, I'm planning to give myself a pay cut too." Yeah, I'm sure that loan would get approved right away.
* Old news, but doesn't look like anything has changed. That can keeps getting kicked down the road.
Democrats on the other hand think that giving money to senior citizens on fixed incomes, the unemployed, and people who need food stamps makes more sense because they are the people who are going to spend it right away - and the money gets to them faster! The idea IS to keep spending money, right? Got to keep that fur farm going around after all.
The President doesn't like this, because giving money to people who don't have any might make people wonder why they don't have any - and if they can suddenly get it now, where has it been all this time? Besides, if you give money to poor people, sick people, and the elderly, they don't die off as fast and they are a real drag on the economy. See, it's a sin to give money to people who need it (weakens their character), but giving a token amount to those who are still getting by is an investment in keeping them distracted from what's really going on, while giving lots of money to those who already have much only makes sense - they've proven they can handle it, right?
Some questions are too dangerous to ask, some ideas are too controversial to examine.
Like another idea. Democrats also tend to think having the government use some of that money directly to rebuild bridges, schools, etc. is a good thing because it A) spends the money on stuff right here in THIS country and B) creates jobs right here in THIS country. Republicans are against this because A) they don't want anyone to see Government actually being useful AND helpful, B) they can take a much bigger cut off the top if the money gets handed to them directly and C) they can send it elsewhere in the world for a better rate of return.
Of course, there's an even bigger problem that needs to be considered. Does it really make sense to direct all our efforts at maintaining the status quo, when doing so is ultimately suicide on a global scale? Seriously, isn't it time we turned disaster into opportunity to get things right for everyone, instead of the model where disaster is used to tighten the grip of the wealthy/powerful on our collective throats? (The linked video starts out by looking at electroshock and torture - but watch through the first minute or two, and you'll see how it connects with our economy and politics.)
Make no mistake, we're on the verge of what could be a real break point here, in the same way that 911 was. We could have taken that disaster and used the shock to the system to address fundamental flaws in the way we interact with the world. The neocons grabbed the moment, and well here we are with a whole range of possibilities gone forever, not to mention the rule of law, constitutional government, and a better order of things in the world. Didn't happen, and time is fast running out.
Instead of trying to patch the failing paradigms of the past with denial and delusion, we ought to be leveraging the unavoidable economic disruptions to start making changes for the long haul. A one-shot stimulus package that does nothing to change an unsustainable way of life is the equivalent of a snort of crack. Great rush - then a crash. As long as we are going to be throwing money around, let's really invest it in a future we'll be able to live in.
While I could certainly stand an infusion of cash to pay down a chunk of my plastic debt, I can't help thinking I'd just be rewarding bad behavior. Hey - you know the bank will just use that money to make more bad loans and push more bad economic policies so they can keep cranking the money machine around faster.
We need to do better. We have to do better. We CAN do better. Contact your congress critters, write letters to the newspaper, call the talk radio shows and get the word out. Now that John Edwards has stepped back for the moment, it's up to us to keep pushing the message that the economy no longer works, and bandaids are not the answer. The future is at stake.
But then, it always is.
UPDATE: Jane Hamsher at Firedoglake has the low down on the stimulus package. Doesn't look good for the future.