Checks for $600 Won't Fix Our Economy

Washington was excited. The media establishment applauded. Wall Street smiled. Somewhere, a bluebird of happiness chirped.

In a celebrated display of bipartisanship, both parties joined hands last month to pass a whopper of a stimulus package. Cash, they crowed, would soon be flowing. "We're sending a $600 check to you, and $300 to you, and $1,200 to couples, and...well, almost everyone will get money! It's manna straight from heaven to get our big ol' economy high-ballin' down Prosperity Highway," they exulted.

"Not that there's anything wrong with our economy," they quickly added. "No, no," said the self-congratulatory stimulators. "Everything's fine. Really fine. Really."

In his State of the Union peroration, Bush insisted, "Americans can be confident about our economic growth." Treasury Secretary Henry Paulsen chimed in, "The U.S. economy is fundamentally strong." Buckshot Cheney came out of his bunker to assert that America has a "solid platform" for continued economic growth. And Condi Rice assured world leaders that our economy is "resilient, its structure sound, and its long-term economic fundamentals are healthy."

Hmmm. If the basics of the economy are in such great shape, why would we need all this cheerleading by the wizards in charge? You don't have to be in Who's Who to know what's what. They can whoop it up 'til they're hoarse, but for most Americans, the kitchen-table fundamentals are nothing to cheer about. As a fellow in Missouri recently said to me, "If these are good times, why aren't I having one?"

While it's probably rude of me to look a gift stimulus in the mouth, this one seems seriously flawed. The feeble philosophy behind it is the same that shaped George W's insulting comment after 9/11, when he declared that the highest civic role of the American people is to "go shopping." Come on, George, America can't shop its way to greatness, nor will this onetime, government-funded shopping spree lead us to a sound economy.

Follow the money: Let's say your check arrives and you drive straight to Wal-Mart to pick out some new clothes, an electronic gizmo you've been wanting, and a couple of toys for the kids. Pay your $300 to $600 and--listen!--you can almost hear the economic machinery kicking into gear, stimulated by your purchase of products.

But wait--we make very little of that stuff in America anymore. Those machinery noises are coming from China, where Wal-Mart and most other retailers have their goods made. Thus, our leaders are shipping billions of dollars from our public treasury to you and me, asking us to spend it in an economy that's based on further enriching Wal-Mart's wealthiest investors and further stimulating China's massive export economy. How sound is that? Wal-Mart and China profit--but we don't.

The real economy

You wouldn't know it if you depend on the conventional media for your news, but the stock market is not the economy, and economic growth is not the same as economic health. For years, stock prices have been buoyant and the Gross Domestic Product (GDP is essentially the total wealth generated by our economy each year) has been growing like a teenage boy, increasing by more than a third from 2001 to 2007. These two indicators have become the Holy Duo for defining American prosperity, and since they have been ascendant, the country's comfortable economic establishment has happily assumed that all is well.

These elites are clueless about the real economy. Take Alan Binder, a former member of the Federal Reserve Board and a policy confidant of several Democrats, including the Clintons. Earlier this year, this high-powered thinker was baffled by polls showing widespread economic pessimism. "People are more sour about the economy than the data would seem to warrant," he mused.