Feds plan to spend till we’re spent

Nothing has separated the competing ideologies in this country more than government spending.

One group sees government spending as a major part of the problem, while the other group sees government spending as the solution.

MY OPINION: THOMAS OLIVER
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One group seeks tax cuts, while the other proposes new government programs.

One group thinks the best jobs are produced by private enterprise. The other believes jobs can be created by government spending.

If you observed the past eight years as a perverse combination of the two — tax cuts with prodigal spending — then you’ll recognize what’s about to transpire.

Prosperity produces excesses. The business cycle corrects for this by getting rid of the excesses. They’re called recessions. In this case, it’s the Mother of Recessions.

While business and individuals understand the problem and are responding responsibly, our politicians simply can’t.

Consumers are pulling back. Reducing debt. Businesses are pulling back. Reducing debt. We’re hunkering down.

So, what does our government propose? More of the same. Except bigger, bolder.

“It’s politics as usual on steroids,” says Doug Williams, president and chief executive of Atlantic Capital Bank, who’s gaining notice for opting not to participate in the government’s bailout program.

Not that there is any compelling, or even halfway compelling, evidence that this spending will stimulate the economy. But it sounds good, and after all, that’s what’s important.

And everyone knows we need to do something about our infrastructure, so why not spend several hundred billion on roads, bridges and schools?

Never mind that spending on infrastructure has been increasing — 50 percent over the last 10 years, according to one calculation. Never mind that infrastructure expenditures are the currency of congressional earmarks.

How many bridges and roads can we build to nowhere? How many failing schools can we refurbish?

We’re about to find out.

Just as we’re about to find out how successful this administration is at combining competing philosophies into an efficacious program. It might be more popular when Obama does it than when Bush did it, but that won’t improve its odds.

How does any of this stop the decline in housing prices? How does any of this induce banks to lend, customers to borrow?

Williams says the catalyst for recovery will be when we reach a floor in housing prices, which will restore confidence in consumers, businesses and investors, which in turn will unlock the credit markets.

Unfortunately, as Williams reviews worldwide housing corrections over the last 40 years, the average correction has taken a little over six years.

“We’re not quite halfway there,” says Williams.