US Recovery Plans

While it may be very early in the Obama administration, and while the Obama recovery plan may be better than the Bush recovery plan, it still leaves a lot to be desired.

So far both administrations have only served to enrich the already rich executives who have received billions,--- yes billions, --- in compensation and bonuses, --nothwithstanding their companys’ abysmal performance. To date - only the rich have benefitted from these recovery programs.

Most agree that what is needed is to stimulate the economy immediately by getting the consumer to have a sense of confidence that he will have a job, will have a home and should spend again. Until the consumer is directly affected by any recovery plan we fear no recovery is imminent.

One proposal, that we feel had significant merit, was to temporarily suspend the Social Security payroll tax. This would have IMMEDIATELY added as much as $120.00 PER WEEK to every working man’s income. This idea was rejected. Instead Americans got a tax credits - YAH that will give you confidence that you will have a job tomorrow and get you spending again.

No one is against rebuilding necessary infrastructure. In fact its about time. We have seen the consequences of the levees collapsing in New Orleans, and we have seen the consequences of bridges collapsing such as the one in Minneappolis. But such projects will take years to get off the ground and to put real money into the working man’s pockets.

And we all know how over inflated are the costs of government projects. This will make a lot of rich people even richer. But how much of this will trickle down to the average Joe? How will it help him save his home before it is foreclosure; save for his retirement; or pay for his children’s higher education?

The world will eventually get out of this recession. The question is how long will it take. Remember the Great Depression of 1929 didn’t end under the New Deal. It ended with World War II which began 10 years later. And Japan has still not recovered from its economic collapse of 1990.

We would like to close this Commentary with the words of Economist John Kenneth Galbraith who said: "The only function of economic forecasting is to make astrology look respectable."

We fear that with the Recovery Plans proposed so far, -- the forecasts that we will be out of this disastrous situation in a year or 2 falls within Mr. Galbraith’s assessment of such forecasts.