For those of us who believe that there’s room for demand-push alongside the supply side, the idea of a stimulus package was not necessarily a bad idea. It all depended on what was in it. Unfortunately, a combination of irresponsibility, ideology, and pork barrel eventually led to a package that, in its longer term budgetary implications, may ultimately prove to be something of a Pandora’s box.
Put another way, so far as the nation’s balance sheet is concerned, too much of the spending involves the creation of permanent liabilities rather than permanent assets.
Seen in that light, these comments coming out of Caterpillar today make interesting reading:
The infrastructure portion of the stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure…China, with an economy one-third the size of the United States, is allocating over three times as much for infrastructure.
Of course it’s true that China needs more infrastructure spending than the U.S., and of course it’s true that Caterpillar is, to an extent, talking its own book, but still . . .