Obama – Spending or Investing, Big Differences

About the Author

author photo

Ohg Rea Tone is all or nothing. He is educated and opinionated, more clever than smart, sarcastic and forthright. He writes intuitively - often disregarding rules of composition. Comment on his posts - he will likely respond with characteristic humor or genuine empathy. He is the real-deal.

See All Posts by This Author

Obama – Spending or Investing, Big Differences

President Obama has proposed a huge federal budget.  In actual adjusted dollars the budget is the largest since 1945, just as we were coming out of WWII.  The Republicans are shouting and whining and crying the traditional refrain: “The Liberal are spending our money!  Run for your life!”  Obviously, there is much spending – but would the dollars better be characterized as investing?

In this house we practice both spending and investing.  We spend money on a night out at the movies, and we invest money in a new roof for the house.  Spending money suggests the money goes out the door with a very short term, feel good,  return.   Investing money suggests we are wisely converting dollars to something tangible – something that will pay dividends in the long term.

How about this old axiom: “Sometimes we have to spend money without thinking about it.”  That idea applies to emergencies only.  If my grandson breaks his arm while playing in my back yard I will take him to the Emergency Room and spend money without thinking about it.  “Just fix his arm,” I will say to the Doctor.  The axiom of spending with out thinking does not apply to breast implants or a face lift or buying a new motorcycle or a golf outing in Las Vegas.

So the simple question is this: Is the Federal Government spending our money or investing our money?

The answer depends on whether we define our economic situation as a broken arm or a face lift.  Here is an example of the Republican mantra – We are buying a whole new fleet of cars for federal government use.  I have heard 300 million dollars and I have heard 650 million – the amount is less significant than the outcome.  Personally, I would rather buy a car from General Motors than just give them the money – they create jobs and we get a new car.  We should not buy new cars just to be buying new cars – I drive a 1992 Chevy Pickup because it works just fine.  Our economic crisis is exactly that – a crisis.  We should invest in jobs at General Motors by upgrading our fleet of cars. In this case, because of the economic times, buying the new car is an investment in our future.

Wars are inherently a drain on our economy.  Investing in a new washer and dryer reaps greater dividends than spending to build a missile.  Both create jobs in manufacturing – but we blow up the missile whereas the washer and dryer improve our lives for several years.   It is reasonable to view the military much like we view the police or fire departments.  They don’t build anything, they are merely cost centers – but we accept the cost as a means of protecting our assets.

So the money is spent if a problem is not fixed, it is invested if we have a long term return.  If I walk into the emergency room with my grandson and say, ‘fix it no matter the cost,’ then I have an expectation of return.  The broken arm is fixed.  If I give the doctor my money and he does not fix the arm – then I have been ripped off – my money lost and the arm remains broken.  The Economic Stimulus must be successful – or it is just money spent.

We must have a means of measuring the success.  There are many economic measurements available:  jobs, home buying, construction of new homes, retail sales, etc.  The broken arm metaphor applies again.  One Doctor (Democrats) will say operate, put a metal pin in the bone to hold it together.  Another Doctor (Republicans) might say, put a cast on it – it will heal itself.  Both will wait two months and xray the arm and determine if the method of correction has worked.  If not, then the Doctor will try something else.

We the people are like a family in the waiting room.  Two Doctor’s have given us their opinion and we must decide which medical procedure is most appropriate.  In this case we have chosen the Democrat.

This writer believes that most of the economic stimulus package presented by the Obama Administration is focused on investment.  But as with the broken arm, we will watch the healing process with great interest.  And we will be ready to try something else if the prescription for success fails.

There Is 1 Response So Far. »

  1. […] "Obama – Spending or Investing, Big Difference" Originally published:  26 February 2009 Submitted by:  U.S. Common Sense Summary:  Looking into the long-term impact of the Stimulus bill and asking if it is an investment or just spending. […]

Post a Response