The Strategy, Part One
July 12, 2010 12:47 PM
We risk a plunge back into deep recession or worse if our federal government doesn't inject another shot of stimulus into our still anemic economic body.
All this week, I'll be blogging on the response to the Great Recession. Let's start with the very strong, interesting and healthy debate going on right now nationally and even internationally about what the next step should be to help continue the recovery.
Most economists seem to be on the side of more stimulus spending. They're fearful that multiple indicators show the recovery to be slow, weak and tenuous. They believe that stimulus spending to date has kept the Great Recession from becoming a second Great Depression, but they're concerned that trying to move to balanced budgets now could stop the recovery short and plunge us back into recession or worse.
On the other side of the discussion are mostly political types who look at movements like the Tea Party and see a populist backlash against deficit spending. It's not just some Americans who feel that way, though. Germans are calling for belt tightening as well, and Greece and other weaker members of the European Union are being forced into austerity by their creditors in stronger nations.
I side with the economists, realizing as I do that it's not called the "dismal science" for nothing. Nobody really knows what the answer is, but I'm convinced that more stimulus will at the very least keep us out of depression and maybe give us that last big shove into sustained recovery.
Another reason I support more federal stimulus investments is that it is good for local governments and their taxpayers in at least two ways. The new stimulus bill being discussed in Washington would give relief to state governments. That's important to Madison because about 15% of our budget comes from aid programs from higher levels of government. If Wisconsin faces another big budget deficit it means that our state aids are very likely to be cut, resulting in service reductions or property tax increases here.
The other reason I support more federal stimulus is that it will help us do even more infrastructure projects, like the one currently going on on University Avenue. That badly needed project is being done a couple of years ahead of schedule and with less property tax dollars because of the first federal stimulus bill. And it's just one example. So far, about $36 million of federal stimulus has come to Madison to do things like rebuild streets, weatherize homes and businesses and pay for new, fuel-efficient hybrid busses.
I know that this isn't necessarily a politically popular point of view, even in Madison. The majority opinion seems to be on the side of austerity. But I don't mind going against popular opinion when I think it's off the mark, and I sure do in this case. Even if I'm wrong, what we'll have at the end of the day is more streets rebuilt that needed to be rebuilt at some point anyway and more homes and businesses that are less energy dependent. Both are good investments for the long run. Far from wasting money, these are investments in a more secure future.
Tomorrow, the implications for the city of Madison budget.