Friday, February 6, 2009

No time to waste?

If you have made very many major purchases in your life - or if you have just spent more than a few minutes on the phone with a telemarketer - then you have probably copped on to the fact that, when the salesman tells you that you have to commit to the purchase right this minute or else, then it's probably a good idea to take a breath and refuse to be pressured.

And, if you do give in and go along with the salesman about closing the deal right this minute and then he says, oh, by the way, could you make the check out to "cash," well, then the warning bells should really go off.

George W. Bush's Treasury secretary Henry Paulson sounded like one of those high-pressure used car salesmen back in October when he went on all the Sunday interview shows to tell the country that something really, really bad would happen if he didn't get an $700 billion to use as he pleased right away. And most congressmen, as well as the two presidential candidates, fell right in line.

Now we learn that Paulson used $254 million of that money to buy equity in companies that, at the time, was worth only $176 billion, according to a Congressional oversight panel. It would be nice to find this news surprising, but it just goes to show what many of us already know well. People just aren't nearly as careful with other people's money as they are with their own. And spending large sums of money in a panic is a good way to waste some or all of it.

Does this mean that I think that Congress should be doing nothing about the economic situation? Of course not. But the country needs to be careful about doing things in a panic. One bad sign: instead of getting those emails telling me how I can get rich by sending cash to someone in Nigeria, I have lately been getting emails telling me how I can get some of the stimulus money.

Unfortunately, President Obama has been adding to the atmosphere of panic, exhorting Congress members of both parties to get on board with the stimulus plan without delay, even while reasonable people keep finding major problems with it and public approval of the plan keeps dropping. I understand why the president is doing this. He knows well that if something this large isn't done quickly, it will drag out longer and longer and become more difficult to get passed. And he probably understands that perhaps the biggest benefit of a stimulus package is, more than its financial impact, its psychological effect, that it calms markets and investors and consumers because they are reassured that the government is doing something.

But Obama is spending way more energy on trying to get something passed than he seems to be on making sure that it's a good bill. It's as if he doesn't care what's actually in the bill, just as long as enough other people like it. And by being so forceful about how dire things are and how they will get worse if a bill isn't passed, he is actually increasing jitters rather than calming them.

The fact is that we are headed for a period of more economic pain whether a huge spending bill is passed or not. And the government's ability to affect the amount and duration of the pain exists more on the side of prolonging and deepening it, by doing the wrong thing, than on the side of being able to fix it sooner. So there is probably no harm in taking a bit more time to make sure that the bill is as good as it can be under the circumstances. But it would be easier if Obama were acting more as a leader rather than a facilitator.

When politicians get wildly impatient about passing this kind of legislation and about spending this much money, it makes me think that their biggest fear is that the economy might start improving without them.

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