Terry Neese on Stimulus Package |
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This interview is part of the Stimulus Package interview series. Following is an interview by OurBlook with Terry Neese, a distinguished fellow at the National Center for Policy Analysis. The NCPA promotes private alternatives to government regulation.  What do you like about the huge stimulus bill signed by President Obama?TN: There is little to praise in this $787 billion stimulus bill. The President signed a colossal bill that virtually no one read, which relies on out-of-date economic theories to stimulate the economy. The bill spends almost as much money as the total amount of U.S. currency in circulation. The Keynesian economic theories that Congress used to write the bill are obsolete. They mainly rely on inducing workers to take lower real wages (because the ensuing inflation will diminish real wages in the future), or borrowing from an otherwise productive sector of the economy to fund relatively unproductive pet projects and government expansion. I fear the stimulus bill will only drive the U.S. further into debt without adequately addressing any of the real solutions to our economic turmoil. Perhaps most importantly, it doesn't adequately address the needs of small businesses, which we know represent most of the 27.2 million businesses in the United States and remain the prime drivers of growth in both good times and in bad. What don't you like? TN: There are many provisions in the bill that I worry will do more harm than good, including the overall assessment of the Congressional Budget Office that the bill will eventually create so much public debt that it will crowd out private investment and ultimately shrink the GDP more than if we hadn't done anything. Among the most egregious provisions in the stimulus bill is the creation of a $1.1 billion Federal health board for comparative effectiveness research. This board will be composed of 15 government employees who will conduct research into which drugs and medical procedures are cost-effective. This approach is radically different than clinical comparative research, which aims to produce better clinical outcomes for patients. Instead, the government will now be making decisions about which medical treatments are cost effective. This could lead directly to government decisions about which medical treatments the government will or will not pay for. Here are a few more of the non-stimulating projects that people should know are in the bill: · $140 million for volcano monitoring systems · $200 million to design and furnish DHS headquarters · $20 million for IT upgrades at the Small Business Administration · $10 million to combat Mexican gunrunners · $650 million for the DTV converter box coupon program · $24 million for USDA buildings and rent Is there anything else government should be doing to help us out of the economic mess we're in? TN: To date, many of these economic problems have been caused by government policies that distort normal corrective market forces. So, in many ways the government would best serve the economy by getting out of the way. For instance, because of the erratic policy decisions to this point, many investors are not sure what government will do next. Many investors are reluctant to inject capital into the economy when government economic policy is uncertain, unannounced, or changes week to week. Hence, much of the desperately-needed capital remains sitting on the sidelines. One proactive measure the government should consider is to suspend the mark to market accounting rules. NCPA's Distinguished Fellow Bob McTeer has done some very interesting writing on this subject. In short, this would allow realistic values to be put on mortgage-backed securities, thereby restoring some ability for the markets to sort out otherwise "toxic" assets by valuing those assets on the basis of their potential worth in the future, rather than the capricious rules currently required by the government. Do you think the economy can return to where it was a year ago and if so, how long might it take? TN: The economy will eventually recover and continue growing, as free-market economies always do. What we are currently witnessing is an economic bubble bursting, and like all business cycles this is a natural process. This in no way minimizes the trouble and heartache caused by this unstable economy. This economic downturn has definitely had a system-wide impact that has affected many families. Regarding recovery, nobody knows exactly how long it will take. It is likely that we can expect to a see the beginning of a recovery as investors and consumers begin to gain confidence and trust. Needless to say, confidence increases when government economic policy is permanent and consistent. As the Administration sets a plan in action and proves that they will not deviate from that plan, I expect confidence will grow. On a personal level, have you been hit hard by the current debacle and what are you doing to keep going? TN: Everyone is feeling strained by the current economic situation. Unemployment, housing foreclosures, and uncertain prices have caused all of us to rethink how we behave. I can speak to this personally as I have watched family and friends struggle. In particular, small business owners who try to obtain loans to stay in business, watching their home values decrease, and our nation's youth saddled with mounting debt caused by bad policy decisions like the stimulus bill, puts extreme pressure on the public at large. I have personally cut back on spending and focused more on how my government is functioning. Is there anything else you'd like to say about the economic crisis facing our nation and the world? TN: Government spending will not solve these economic problems. Even if an economic miracle occurs and the current downturn is somehow temporarily solved by this stimulus bill, the current economic troubles are a symptom of the overall problem. Too many mandates and regulations, irrational tax policy, too much government spending, and inconsistent economic policies cause too many loopholes and create unintended incentives that result in these types of bubble-based economies. What we need now is to resist the urge for command-and-control legislation and, instead promote personal, portable, flexible, fair, and voluntary economic policies that empower people to be as economically productive as possible. Terry Neese is the founder of Terry Neese Personnel Services in Oklahoma City and served as president of the National Association of Women Business Owners. She has written articles for numerous magazines and newspapers and has been a guest on Fox News, CNN and CNBC. She has been appointed to numerous positions by Presidents Bush (both of them) and Clinton, including the Small Business Advisory Council.
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Comments (1)
  written by Randy Brogdon, April 20, 2009
Terry,I appreciate your stand on the stimulus package
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