A G K Y R A

In the Republican debate last night, Mike Huckabee expressed his reservations about the economic stimulus plan now under consideration by the Senate. He said that the $150 billion (or whatever the number is) will be financed by bond sales to China, and that people will turn around and spend the money on Chinese products, so whose economy is really getting the boost? He’s got a point, not about the effect of the stimulus plan on our economy, but that all the spending programs candidates are touting to induce you to vote for them (Free this! Free that! More of whatever you want!) have to be paid for by somebody. If we don’t pay for it in higher taxes (we won’t, at least not in the short run), we’ll sell bonds to raise the cash, the effect of which is to drive the dollar lower against other currencies, not to mention we’re mortgaging our future earnings for the sake of present consumption. Basically, it’s like using your credit card to pay for a movie tonight and a steak dinner tomorrow, knowing full well that you can’t pay the balance when the bill comes due, let alone the following month’s movies and steak dinners. So be wary of attractive freebie offers from candidates.

Huckabee was seriously wrong, though, in the second part of his answer. He has a different idea about how to stimulate the economy: add two lanes of highway along I-95 from Maine to Florida, using American labor, American steel, American concrete. It’s a fine idea but worthless as an economic stimulus. The whole point of the cash rebate that Congress and the President are now working on is that it’s immediate. We’re just in the beginning stages of recession, and the idea is that an injection of disposable cash for consumers could reduce the effects, kind of like getting a flu shot at the beginning of flu season. You might still get the flu, but it won’t be quite as bad or last as long. A big capital project like adding two lines of highway takes years and years to plan and execute. When would work get underway? Five years from now? Ten years? That would do absolutely nothing to help us now.

I can only interpret Huckabee’s answer two ways: he doesn’t know enough basic economics to realize that he’s talking about apples and oranges, or he’s politicking. As someone on C-SPAN mentioned this morning, I-95 does run through a lot of the important states that are going to be voting on Super Tuesday. A shrewd answer, perhaps, but is it entirely honest?

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