The Advocate Online - March 6, 2009

Analysis and Commentary on President Barack Obama’s Stimulus Package

Con:
Everything won’t be solved, trust not rebuilt

Christina Hammett
The Advocate

With the gross national debt teetering on $10.9 trillion (according to zfacts.com), an extra two-thirds of one trillion dollars was recently added to this monstrous number, coming in the form of an economic stimulus package that is rather variable in whether it will actually boost the suffering American economy.

Ron Rambo/The Advocate

Despite the Feb. 10 approval of the $787 billion package, the trust of the American people and stockbrokers in regard to the faltering economy has not been altered, evidenced by the daily news of the continuous skidding of the Dow Jones Industrial average. The Dow hit an all-time high about a year and a half ago, closing at more than 14,000 points, but since then, it has been dropping on a consistent basis. On Monday, the market closed under 7,000 points for the first time in 11 years, which just goes to show that stockbrokers do not believe in investing and trading any longer.

Americans are currently saving money at record rates, and companies are filing for bankruptcy, including local businesses, with the most recent of these being announced Wednesday. Joe’s Sports, Outdoors and More, based in Wilsonville and a staple in the Northwest formerly known as G.I. Joe’s, filed for Chapter 11 bankruptcy, though a spokesman for the company said they don’t have any plans to close any locations at the moment. The lack of spending and the scramble to save has caused more problems with the struggling economy.

The point is this: As much as Barack Obama would like it to, money can’t solve everything and it certainly cannot build the trust necessary to save the American public from the lapse into another Great Depression. Without trust in the government, the stock market, banks, major companies, and other avenues, any attempts at patching up the damaged economy will largely fail. It is like trying to put a Band-Aid over a wound from an automatic rifle – it just won’t work.

In some ways, there are great parts that may come out of the stimulus package, but the problem is that once the package is divided 50 ways across all 50 states, how much will be left to truly make a difference?

According to State Rep. Dennis Richardson, the State of Oregon has $8 billion in gross debt. “After other adjustments have been made, Oregon taxpayers are ultimately responsible for approximately $5.4 billion in tax-supported, long-term debt.” And this was actually at the end of 2006. The debt has increased since then. Richardson also said, “Assuming an interest rate of approximately 3.8 percent, the biennial cost for debt service on Oregon’s tax-supported debt is more than $400 million.”

With state debt and personal debt taken into consideration, Oregonians will not have an easy time paying it off over the next few years. Richardson said in regard to debt that three rules should be remembered:

1. Interest is what poor people pay and wealthy people earn.

2. Unnecessary debt is a shackle that enslaves people. Debt burdens the debtor with interest payments and interest is a master that never sleeps. The burden of interest is constant. It never takes a day off and it always comes to claim its due regardless of how well off or how poor the debtor might be.

3. Wise people avoid unnecessary debt like a plague. Whether it is a young adult or a state or national government, once in debt options become limited. A person in debt voluntarily becomes an indentured servant. Debtors are enslaved and debt is their master. Those in debt must always consider how they will make their payments before they can consider making life decisions such as going back to school for a better education, making a job change, or exercising their personal freedom in any other way that might impede their ability to make payments on their debt.

Since the nation is currently drowning in debt, these “rules” should be taken into consideration. The last thing America needs is more debt and more money thrown its way without considering the consequences. Even if the stimulus package does work to bring the economy out of its downward spiral, there will be major consequences to work through in the future.

With the amount of debt in Oregon and America, our children, grandchildren and possibly even great grandchildren will be paying for the decisions that have been made by our government and the major debts that have been created.