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Make Congress put real skin in stimulus
Susan Lee
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TEXT OF COMMENTARY
Kai Ryssdal: About the only unknown about the stimulus package that's going to happen early in the Obama administration is how big it's going to be -- $900 billion? An even trillion anybody?
Just as they did this past spring, lawmakers and the White House are going to settle on a package, distribute the money and hope it does the trick.
Whether it is going to work any better, we don't know yet. But commentator Susan Lee thinks there's a way to help Congress be smarter about it.
Susan Lee: Can you hear that train a'coming? Yep. A stimulus package is rolling around the bend. And it's coming despite the fact that stimulus plans either don't work or work in ways not intended.
Now, I understand the need to do something in the face of a dreary economy. But good intentions aren't enough. Maybe there's a way of encouraging better choices and improving our odds of success.
What if we made Congress put real skin in the game? What if we mandated that any Congress person who votes in favor of the stimulus must put his or her money behind that vote?
Here's how it might work: Intrade, an online prediction market, offers an interesting way to bet on the outcomes, like the direction of the economy. Take, for instance, the Intrade contract that stipulates there'll be a recession in 2009. If the U.S. has two successive quarters of negative GDP growth in 2009 -- then buyers of that contract win.
Since lawmakers will be blabbing about how the stimulus package will boost economic growth, they are essentially betting against a continuing recession. And so, they should be required to put their own money where their mouths are and make a formal wager on the outcome. And, let's say, to give the plan real bite, congressional supporters ought to spend 5 percent of their income on these contracts.
If the stimulus fails, and the recession continues, then Congress would have to make good on their bets. Supporters of the stimulus package would have to pay up.
And, as a bonus, maybe the people on the other side of these contracts, wagering against the success of the stimulus, would be taxpayers. So if it doesn't work, Congress will have to pay for its mistaken policy and taxpayers could take home the profit. Then, at least, somebody would have made money.
Bottom line? Just maybe the possibility of real-money losses will make Congresspeople more cautious about voting in favor of a stimulus.
Ryssdal: Susan Lee is a weekly columnist for Forbes.com.
Susan Lee's commentary has to be among the stupidest I have heard on your show. Perhaps she and Forbes should have been required to guarantee ever upward stock prices, or put some of their own skin in the game now, whichever way they want to.
Marketplace and the media in general have to do better than this. When we get Robert Reich describing why stimulus is necessary, the demand side of the economy, you are doing well. When we get this diversion from the crisis we are in, as if there will be a recovery guaranteed by stimulus, is very useless. She apparently is not aware of the gravity of the problem. Marketplace ought to be.
Comments like Susan Lee’s are not unexpected from an employee of Malcolm Forbes. She fails to elaborate her wholesale dismissal of fiscal stimulus plans. That, of course, would entail dismissing a good bit of Keynes’s work as well as the growth his insights about fiscal stimulus inspired during the 1930s and the effect of government spending in in the 1940s. Still, America in the 1930s and 1940s was the world’s large creditor state, now it’s the largest debtor state. Fiscal stimulus added to the trillions already committed to rescue of the banking system and financially well connected is probably not sustainable. At some point other countries may not buy our debt. What’s needed is for China, Germany and Japan (and other countries with external surpluses) to stimulate domestic demand above their output. This combined with a relatively depreciating dollar and a targeted fiscal boost would stimulate American exports and perhaps return America to more of a balance.
After hearing Susan Lee's comments last night, I knew I just had to write in, which I have never done for Marketplace (normally a very substantive program).
But to give a minute of this program to have Ms. Lee's absurd, juvenile, and yes, vacuose comments should go down as one of the more regrettable commentaries in Marketplace history. And certainly does not look favorably on Forbes.com to have comments such as these come from them. There are so, so many arguments against this idea as to take up several total Marketplace segments. PLEASE do not waste our time with the likes of this again.
We'd be in better shape if everyone assumed the risk for the things they
do and the things they create. A few applications:
- Politicians and lobbyists prepare their own taxes, working through
the very tax code they created, and suffering the penalties if they get it wrong. (One year of this and a simplified tax code is almost
guaranteed.)
- Automobile makers drive the car from their fleet with the poorest safety rating.
- The ACLU locates their offices right next to an adult book store. (There's a lot of free speech to protect.)
"The ultimate result of shielding men from the effects of folly is to fill
the world with fools."
I almost wish that the website mentioned had paid for the product placement, so that none of my donations to public radio would have been wasted on this vacuous segment.
Members of Congress usually run for re-election, ma'am. A few bucks in a side bet isn't going to shift their focus.
Not only is Ms. Lee's proposal ludicrous but it is also premised on the absurd notion that the "bailout" is supposed to reverse the recession by 2009, when it is quite obviously designed mainly to try to prevent something much worse than we are already experiencing. I'd bet my 401K that we won't be seeing positive growth in the first two quarters of 2009, regardless of what the Congress and President Obama do - oh, wait!
Please have future commentaries from people who understand more than my next door neighbor. Forbes, seriously?
Susan Lee of Forbes' ludicrous proposal suggesting Members of Congress be required to invest their own money in "betting" on the success of a stimulus package if they voted for it got me thinking of other such schemes she might be interested in.
Had the supporters of President Bush's invasion and occupation of Iraq had been required to "put real skin" into the invasion, perhaps being set down on a Baghdad street corner with a rifle in their hands, they may have been more cautious and taken a closer look at the so-called "evidence" the administration hood-winked them with.
Just a thought.
