The Big Debate Over Stimulus Spending

I was speaking with an old friend today who lives in San Francisco and we starting talking  about politics, stimulus and the yin and yang between local projects and federal obligations.  The driver from the conversation was the demolition of Doyle Drive an old elevated highway, ostensibly a shovel ready project.

To provide some background, my buddy is a Republican who considers himself a Keynesian. He is also a liberal on social issues.  He believes the government should participate in spending to facilitate growth (a la Franklin Delano Roosevelt) but the spending should be targeted, growth focused, rather than earmarked as payback for votes.  There should be policy drivers to determine the most appropriate investments and, in turn, which projects generate solid return on investment for the taxpayers. “Debt needs to be responsibly incurred” he stated.

What drove my friend to wits end though was his congresswoman Nancy Pelosi who in his own words “as good of a local politician at delivering the goods as anyone in the country…but, I wonder shouldn’t we sometimes temper the desire to deliver locally against what is best nationally.” He went on to highlight that Rep. Pelosi is great and tough but shouldn’t be WHIP since she simply uses her power to pay back those who are loyal without ultimate regard for who is paying the bill. This leads to the question of what is stimulus and what should it be for?

What is the obligation of a congresswoman? Represent her constituents fiercely, or temper this energy with a national eye? If Ms. Pelosi is too focused nationally she will clearly not get re-elected.  Yet since this is part of the long range battle, will we now see can congressmen use vision and think of the greater good? If not  her, then who will? Maybe President Obama? Who articulates the policy and what standards should be applied?  We have seen Paul Krugman support spending and Milton Friedman oppose it. No one quite knows how theory sits at the intersection of reality, but two questions come to mind if you agee that spending (and debt) are necessities: i) how do you spend; and ii) who needs to show restraint?

What becomes interesting about this discussion for us at VOTIFI is the concept that individuals on opposite sides of the issue may agree on the importance of spending. Both liberals and conservatives can speak in support of the stimulus program but argue about how to best implement it and that is where the focus on issues can build bridges. We must find a place to start discussing the difficult decisions of federal vs local and priority vs. luxury but isn’t a conversation and acknowledgement over the role of government a good place to start?

Then, once we start deciding if spending is good or bad we can next determine the approach which we want our elected officials to pursue.  Make sense?