The Orange Way Editorial

Weekly Roundup

Global "New Deal": Among the worst ideas to come out of the world economic crisis is Prime Minister Gordon Brown's idea for a "new deal" for the world. The only thing worse than the U.S. Government's intervention in the financial markets would be world governments' obstructionism. The new deal would simply be a tool for incompetent nations to extort huge concessions and financial welfare from the rich states, namely the U.S. (think United Nations but for the world economies).

The Stimulus Package: As stimulus package details continue to be revealed, the picture is only getting uglier. A handful of state governors are contemplating refusing the federal aid as they speak out in opposition to the long term strings that will attach to accepting federal money (though I doubt many of them will have the guts not to accept the package when it comes down to decision time).

To assess the bill honestly, it is clear that the package is geared toward enhancing Democratic party agendas rather that toward stimulating a struggling economy. The original theory for the stimulus package was the tenets of Keynesian economics. Keynesian economic theory has been dispelled by its numerous attempts and failures over the last 80 years (most recently by Japan in the 90s, leading to Japan's "lost decade").

But, even if you assume it is a workable theory, it relies on the premises of lowering interest rates and injecting government spending specifically in infrastructure. The U.S. has lowered interest rates as far as it can control, but the stimulus package does not even attempt to address the second prong- specifically directed infrastructure investment. The bulk of the bill is general pork barrel spending and some tax credits and cuts. Debate over this spending devolved to the point where President Obama was mocking those that complained about the absurd spending, stating instead that any spending is stimulus.

Essentially, a disproved economic theory was used completely incorrectly to promote a $1 trillion spending bill. This is not an encouraging sign for the intellectual honesty of the Democratic party, though, the last eight years does not say much for the Republicans intellectual financial honesty either.

The United States will come out of this recession, but it will be the private sector that leads the way. The real question will be which party is going to cause the most damage and how much government action will serve to prolong the recession.