WILL THE STIMULUS REALLY STIMULATE THE ECONOMY?

“Even before Congress approved the stimulus package this month, congressional budget analysts forecast that this year’s deficit would approach $l.2 trillion – 8.3 percent of the overall economy, the highest since World War II.  With the stimulus and other expenses some analysts say, the annual gap between federal spending and income could reach $2 trillion when the fiscal year ends in September” (Lori Montgomery, Washington Press).

President Obama has stated that his new Homeowner Affordability and Stability Plan will be enough to protect homeowners across the country from the negative consequences of foreclosures.  Obama is also offering subsidies to loan servicers plus cash incentives as much as $1,000 per mortgage to reduce monthly payments to as low as 31 percent of a borrowers income.  But, what if their monthly payments account for over 50% of their monthly incomes?  Even if their loans have been reduced, if they suddenly lost their jobs, as the forecast of unemployment is expected to continue to rise through the middle of next year, they could still face foreclosures.

We are seeing cuts all across our country.  Big corporations are having huge closing sales.  Hospitals are laying-off employees as well as police and fire departments. Schools are trying to decide how they are going to face cutbacks in funds.  They will probably cut school days as well as weeks.  This will be very difficult on students as well as their parents.  However, the Stimulus plan is offering to provide billions of dollars to state and local governments, highway departments, national parks, police departments, and schools.  How it will affect the individual, we will have to wait and see.

It is true that we are in the worst recession, actually close to depression, than we have been since October, 1929.  President Obama knows the task that is set before him seems insurmountable, but he is going to try his very best to get our country on its feet again.  He is trying to convince Americans that he is laying the foundation for long term budget control entitlement reform and, in particular, curbing the cost of health care.  The total of U.S. health care spending in 2007 rose to $2.2 trillion, and the public portion is growing fast.  “Medicare and Medicaid on their current trajectory cannot be sustained,” Obama told a group of columnists aboard Air Force One.  No long term budget plan can get around the massive surge in cost that comes with rising medical care prices and the aging of the baby boomers.  If the health care costs keep growing as they did over the past four decades, you’re up to 20% of gross domestic product by 2050, and the government won’t have money to spend on anything but health care.

President Obama is serious about creating change, although there are those who are doubtful.  He stated to the Air Force columnists on Air Force One on Feb. 13, “My bottom line was ‘Am I getting help to people who need it?”  The change isn’t going to happen overnight.  We didn’t get in this mess over night, and it will take time for us to recover.  But, let’s not get negative.  For those of us who did not vote for Obama, let us at least give him some time to accomplish his goals.  And for goodness sake, we’ve been too apathetic for too long about trying to learn to become more frugal.  Perhaps, that is all that it will take if we all pull together and get our country back on its feet again.  I love my country, and we need to be respected again.

Helen L. Price

(Excerpts from Time Magazine and Mail Tribune Newspaper)