Weekend Update: Given "Spendulus" or Zombies, I'll Take the Zombies

(Photo: AP/Chris Nakashima-Brown)

Happy weekend, folks, we made it.

Well, it's a welcome respite from the cold weather here on the North Shore, but apparently it's not going to last all that long. Winter ain't over yet, folks.

In any event, I was trying to decide if the big news of the morning was the apparent compromise in the U.S. Senate over the "spendulus" bill, or a funny story in the Tribune about pranksters from Texas to Indiana that have decided to start hacking into those roadside electronic construction signs and reprogram them to actually give some helpful warnings, such as "CAUTION: Zombies Ahead".

Getting back to the serious stuff, here's a great piece in the Wall Street Journal that does a good job of explaining in very simple terms why President Obama's apparent belief that any government spending is a 'stimulus' is dead wrong:

Speaking to a House Democratic retreat on Thursday night, Mr. Obama took on those critics. "So then you get the argument, well, this is not a stimulus bill, this is a spending bill. What do you think a stimulus is? (Laughter and applause.) That's the whole point. No, seriously. (Laughter.) That's the point. (Applause.)"

So there it is: Mr. Obama is now endorsing a sort of reductionist Keynesianism that argues that any government spending is an economic stimulus. This is so manifestly false that we doubt Mr. Obama really believes it. He has to know that it matters what the government spends the money on, as well as how it is financed. A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP.

But that same dollar can't be conjured out of thin air. The government has to take that dollar away from someone else -- either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative.

So, is any government spending a good thing, no matter how untargeted, or how pork-laden it is? Clearly not. As we have said many times here before, government doesn't create jobs, the private sector creates jobs. There's just too little of that in this bill for my taste. Of course, our friend Ellen of the Tenth thinks that there's not enough bloat in the proposal.

This whole situation bears some uncanny resemblance to what I remember happened just after 9/11, when everyone was so concerned about further attacks on U.S. soil that Homeland Security was given tons of money to spend on security measures whether or not many of them were actually needed, or wise expenditures. But the government tends to be reactionary, and is often too concerned that by acting in a more measured, calculating way, it will be accused of doing too little, too late. But, we should remember never to confuse motion with progress.

Given overblown and bloated government spending (mostly on non-job creating social programs) and zombies, I'll take the zombies.