The ideological battle once again

People in and outside the United States were probably more than curious about the first press conference that Obama held on Feb. 9 where he addressed the economy and the other secondary sound bites like the Middle East policy, nuclear proliferation and the recalcitrant attitude of the Republicans on the other side of the aisle.

The main topic of discussion has boiled down to two questions: will 800 billion be enough to get the economy going? And, how much should we cut taxes and how much should we spend in public works?

Both questions are being debated along strong and historically determined ideological lines so cleanly defined that it reminds us of the arguments between Obama and McCain during the campaign.

Those who question de wisdom of public spending seem to intentionally or otherwise have forgotten their basic economics. Workers spend most of their money to pay for shelter, food and other necessities. They alone have the strongest capacity to move the economy forward and can do it faster than any other measure during a crisis like this one.

Public spending is not a hand out if it is used to built and maintain needed public infrastructure. It is an investment that promotes greater levels of productivity in the future; better roads to get to better schools and hospitals.

Hence, we build a stronger country and promote greater demand for all goods and services. Most economists are questioning if the government is spending enough rather than too much.

However, many Republicans have argued that the best way to restore the economy is by cutting taxes or by implementing complicated schemes to make sure that we do not run up de budget deficit.

If the crisis continues to evolve the budget deficit will be the least of our problems; the patient is dying and also has a headache, let’s make sure he does not die with a headache, bring the aspirin fast.

During a crisis tax cuts work only if they go directly to those who will spend it for sure, the middle and working classes. The upper classes will save it until a better day.

The ideological battle in Congress today takes shape in it purest form by criticizing the government’s intention to get the money as fast as possible into the hand of those who will spend it.

What is not being debated, however, is how this administration will manage to create a policy to restore confidence in the credit markets, assuming that we alone can do that; rather doubtful, we need a global coordinated solution.

Perhaps, if all else fails Obama should consider to either deepening the government’s intervention in the credit system or nationalizing parts of it in order to promote the flow of cash across the economy; the government as a lender during a crisis, novel but not that daring. But that would also face a greater battle; it is politics as usual in Washington.

— Luis Brunstein