Make Congress put real skin in stimulus
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.
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