By Gary Parker

There has been a lot of questioning about the impact of the stimulus (and remember, Bush began the “bailout” efforts with a $750 billion stimulus in 2008 prior to Obama). So, these efforts to save the economy from going over the cliff were truly bipartisan in the beginning.

But now in an effort to make political gains in the upcoming mid-term elections, some are saying the stimulus is a failure, and we’re headed toward financial disaster. Well, we were headed toward disaster before the stimulus saved us! How soon we forget. Lehman Brothers failed; Bears/Stearns, Merrill/Lynch, AIG … all failed. Remember the Federal Reserve and treasury secretary running back and forth to Congress?

We didn’t get into this downfall of the economy overnight (it’s been several years of greed and neglectful oversight since the ill-fated deregulation of the banking industry), and we’re not getting out of it overnight either. Any mammoth and complicated effort like this (and the Obama stimulus should have been larger than $800 billion so that it could have been more effective in bringing back the economy) will take time before we see its true effects, and we can decide if it was a success or failure. What’s a reasonable time period? I don’t know for sure, but I’m fairly certain it’s a lot more than eight months.

There also has been much criticism of the amount of money adding to the national debt. But in terms of wise fiscal policy, that’s the way it should work. When there’s a major recession like now, or depression as there was in the 1930s, government must spend money to stimulate the economy, creating budget deficits in the process.

Naturally, that adds to the debt and creates concern. But the fact is that it must be done or the economy will get worse, and to do very little stimulus or to do nothing at all would be grossly negligent.

The way national fiscal policy works in times of recession is that you spend until the economy improves even if it creates deficits, and then when the economy does get better you can pay off the debt that was created. Now granted, usually the economy doesn’t sink this far, but that just makes it all the more important to support it with aggressive government intervention.

With a strong American economy in the near-term years, that debt can be paid back much as Clinton paid off the national debt created by Reagan and Bush (albeit with the help of the Dotcom revolution and the skyrocketing stock market), thereby not leaving it to our children, especially if Congress has the courage to make future budgets on a pay as you go basis.

The alternative to the stimulus efforts of both parties was long-term depression like the 1930s. And paying back our growing debt can be done through a recovered and vibrant American economy that any optimistic-thinking economist should believe in. We must have faith in our ability to learn from history (the Great Depression, and let’s please not repeat 1937’s pullback from those stimulus efforts) and in the recuperative powers of a re-directed American economy (green energy prospects are unlimited, automobile manufacturing of more competitive vehicles, and our seemingly endless great advances in technology) that can pay off national debt before our children would have to deal with it.

Gary Parker lives in Archdale.