President Obama signed the most sweeping piece of economic legislation in the nation’s history on Feb. 17 in Denver, Col., officially sparking what may prove to be a long road to financial recovery. On campus, students and professors voiced their opinion, highlighting attitudes ranging from cautious optimism to vitriolic critique.
“I am skeptical of the need for speed at which the stimulus bill was passed and disheartened by the fact that few people knew what was in it until after it was passed and signed by the president,” Prof. Richard V. Burkhauser, economics, stated in an e-mail. “And I am not quite ready to trade in what has been a quite successful, mostly private enterprise system in the United States for one that is ‘revolutionary in its potential for American society,’ if what is revolutionary about it is more control by Washington of our daily lives.”
The bill is set to inject $787 billion into a declining economy, in an attempt to combat the current world-wide financial meltdown. Several countries, including Japan, Russia and Australia, all passed their own multibillion dollar stimulus bills earlier this year.
“…There are many firms that were weak in a growing economy that are now in serious trouble as we have moved into recession,” Burkhauser stated. “And trying to save failing firms is a fool’s errant.”
About $116 billion of the package will fund tax cuts for workers, an aspect of the bill that many Republicans thought should be emphasized more. Indeed, the bill received only three Republican votes in Congress — many GOP congressmen were turned off by the bill’s massive social program subsidization, including $87 billion in aid for states’ healthcare costs.
Prof. Richard Bensel, government, used an allegory of a shot of adrenaline to the heart to describe the stimulus package. The issue, he explained, was that the government holding the adrenaline shot does not know exactly where to place the injection, and so injects in a thousand places at once.
“I’m skeptical,” Bensel said. “I think the money will dribble. Then you’ve got a real problem in that you’ve doubled the debt.”
Despite skepticism from some academics, Obama maintained that the package was a necessity while it was in legislative limbo. In signing, he noted that it would not immediately solve the major issues facing the nation, but it is nonetheless an imperative remedy.
“This could end up very easily backfiring on the Obama administration,” Bensel said. “The revolutionary part of it is in the size of the debt.”
Not all members of the Cornell community question the package’s reliability. Varun Gehani ’09, an economics major who is set to work as an investment banker at J.P. Morgan next year, said that he remains optimistic about his future in the banking industry as well as the economy.
“I would hope people get over fears in the short term and maybe spend a bit more,” Gehani said.
Gehani acknowledged the large deficit created by the package, but noted that the most important context to have in mind is the future economy, no matter how bad the current markets may be.
“It does create a larger deficit, so we’ll deal with that down the road,” Gehani said. “I agree some parts of it are good, but I feel like the tax cuts we’re getting, we’ll have to raise them in the future.”
Burkhauser reiterated Gehani’s point of looking to the future.
“The key is to worry a lot more about the long run than the short run,” Burkhauser said. “Too many people overestimate what is happening now and project it on a straight line into the future. Those same folks who were too optimistic in their investment behavior last year are probably too pessimistic now. The same is true of government which often rushes into a crisis without fully understanding the longer run implications of such actions.”