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Originally Posted by Civicsman
Bob, since there isn't a current suggestion for cutting back on federal government spending (as far as I know), I think your your #1 Worst Thing We Could Do comes off the board.
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Fortunately, it's not much talked about at the Federal level. Unfortunately, at the state level, generally due to constitutional balanced budget provisions and declining tax revenues, it's what's being implemented!
Quote:
Originally Posted by Civicsman
This moves "Spending our Way Out" up to #1. I think you'd get some agreement on this board that this should be #1. However, consider that there has already been a real cost of TRILLIONS of dollars in net worth in the US due to the fall of confidence. There could be much more. Is it it worth spending some money to prevent those real losses? Consider also the loss in tax dollars and the increased outflow in public assistance. In addition, the time cost of money makes spending in today's dollars relatively cheap to repay tomorrow. At a modest 3% rate of inflation, $1 today becomes $0.50 in 20 years, and that doesn't consider increases in the GDP.
Will spending work? I don't know. Nobody knows. As you say, Bob, there's no sure thing here. However, I believe there is technology and infrastructure spending that will 1. Pump cash into the economy and help restore confidence by demonstrating that somebody is working to fix the mess, and will keep working until it's fixed, and 2. Fix damaged infrastructure that we desperately need for productivity, but is easy to ignore on any given day (roads, power transmission, etc) and 3. Fund technologies that are most likely to provide economic leadership for the US in the future. Clean power, supercooled transmission lines <(FYI Karl, this is not scifi), and hydrogen fuel, just for instance.
Spending on stuff like that yields a payoff for the US, no matter what.
"Do nothing" seems to be the mantra of some here, but I fully agree with you Bob that it's darned close to the top of the "likely to cause a disaster" list.
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Spending on roads is an investment, so long as it's not frivolous (e.g. bridges to nowhere). Spending on alternatives to roads, is an even better investment.
I'm not sure to what extent supercooled transmission lines, specifically, are a WISE investment. To be sure of that, you need a cost/benefit analysis, on a case-by-case basis.
But it's definitely NOT science fiction. Existing high-power transmission techniques are amazingly complicated. I tried (but failed) to locate a piece written a number of years back by a friend who watched the power company rebuild a high-power underground line, with all the complications of oil temperature monitoring, pressurization, and trying not to blow it up. Supercooled transmission lines can potentially be combined with hydrogen transport, and the economic picture changes if we have significant hydrogen usage.
But it doesn't matter -- it's not the choice of technology that is important, it's supplying enough capacity in the right places to manage load and make efficient use of available power sources (such as excess capacity in one time zone needed in another, or from rural wind or solar sources to urban consumption).
The problem comes in pure consumptive spending. Bailouts of companies with flawed business models. Unemployment benefits aren't nearly as good for the economy as retraining.