A Less Immodest Proposal
In a previous post I explained that President-elect Obama could do a lot more good (given his publicly stated objectives) by identifying, say, the 10 million households most in jeopardy and then cutting them checks. That would make a heck of a lot more sense than what they’re going to do instead, where even Obama and Krugman are hedging themselves (by warning us times will be tough for years and the proposed stimulus isn’t enough).
But there’s another proposal that also beats Krugman’s ideas, even on their own terms. Let’s review his diagnosis of the recession: for whatever reason, Americans aren’t spending enough. Then since demand for goods and services drops, that reduces Americans’ incomes, so they cut back on spending even more. So on and so forth until we’re all unemployed.
Given that diagnosis, Krugman’s prescription is for the federal government to borrow $1 trillion+ on our “behalf,” and spend it on anything. (I’m not putting words into his mouth: It doesn’t really matter what the feds spend the money on, in terms of curing the recession. Obviously the government might as well look for useful things to buy, but that has nothing to do with depression-destruction.)
Well, I have a much better idea. Inasmuch as the government is going to increase the quota of the federal debt for adult Americans by about $10,000 each, I’m sure they would prefer to be able to spend that borrowed money themselves. So rather than borrowing the money and spending it for us, the government could pass a law saying that every household’s revolving debt has to increase by $10,000 this year, or else they go to jail. Sure sure, that would be tough for people who are struggling to get out of debt, catch up with their delinquent utility bills, etc., but that’s thinking selfishly. If we could all just agree to each go $10,000 deeper into debt, buying CD players, fancy dinners, etc., then all of our incomes would go up enough to offset the debt increase. We’d lick this recession in a jiffy! And best of all, you could spend that $10,000 wisely on your own stuff, rather than getting solar panels in L.A. to show for it.
Now granted, there would be some issues of enforcement. Some antisocial households would cheat by trying to pay their normal bills with credit cards etc. But c’mon, does anyone think this type of objection is the real reason politicians haven’t proposed it? Of course not. The real reason you will never hear something like my less immodest proposal is that the politicians can’t direct the billions of new spending into their cronies’ pockets.
