Before I comment on President Obama’s Stimulus Package, I want to clarify two things:

1) I haven’t read the actual 1,071 page document;
and
2) My knowledge is limited to college-level economics.

Having said that, I seem to share both these qualities with members of the current Congress.

The Bill

The basic premise behind the Stimulus Package is as follows. The economy is experiencing falling output and rising unemployment. More specifically, there are idle resources – unemployed labor and capital. The challenge, therefore, is to somehow use government policy to employ the unused labor and capital. President Obama’s solution, which relies heavily on the Keynesian prescription, increases government expenditure to stimulate private expenditure, aggregate demand, and ultimately, gross domestic product. The Obama Administration expects the stimulus package to give a ‘multiplier’ effect of 1.5. In other words, a $1 billion increase in government spending will increase GDP by $1.5 billion.   

The Invoice

While policy wonks argue about a ‘1.5 multiplier’ and compare multipliers for tax cuts and government spending, they forget about the origins of the current economic downturn. Yes, consumer confidence and expenditure are low. And yes, labor and capital are underutilized. But, these are consequences of a financial crisis with toxic assets and a credit crunch, both of which are still unresolved. Until the financial markets are fixed, fiscal policy – spending or tax cuts – will be ineffective.

Some of our more entrepreneurial students at CMC who have thought their business plans through would probably have a plan for repaying their debt. The Stimulus Package may result in a 1.5 multiplier, but higher taxes or more borrowing will have to repay $787 billion at some point. Advocates of the Stimulus Package, who repeatedly point to the Great Depression and the New Deal, should remember the 1932 Hoover tax increase, which worsened the economic situation. As for increased borrowing to repay debt – it doesn’t seem self-evident to me that a crisis that started with irresponsible borrowing and lending should be fixed with more borrowing.

Of course, things are only this black and white in a world ruled by Economist Kings. In the real world, things are Red and Blue. One doesn’t need to look too far to find spending programs in the current package that have nothing to do with stimulating the economy. Ironically, Senator McCain’s emphasis on reducing ‘Pork barrel’ spending, which seemed to so irrelevant during the campaign, is becoming a major concern now. With skewed economic and political objectives, the Stimulus Package will probably have a negative effect in the long run. Any short run benefits will be offset by the necessary tax increases or inflation for repaying government debt. A smaller, targeted program to fix the financial crisis with well-defined rules for government bailouts and support would be a cheaper and more effective solution.

please note that contributions to this piece were made by Aanchal Kapoor, PO’ 11

One of my favorite CMC institutions is the Athenaeum. About four times per week the ‘Ath’ brings speakers to campus. Politicians, academics, businessmen, and artists are only some of the categories of guests. But for me, the most interesting class of speaker are those who have exceptional experiences or hold unique positions. An individual who is singularly responsible for a breakthrough in thought, or a leader in their field, often deliver the most stimulating talks. The great benefit of the ‘Ath’ is that it does not simply bring speakers who hold values that the audience already agrees with. Freedom of speech is without much value if speech goes unchallenged. If ideas remain ensconced in forums which shun dissent, then who has benefited from those ideas?

A few weeks ago the Athenaeum hosted just such a speaker: Imad Moustapha, Syria’s Ambassador to the United States. Ambassador Moustapha is clearly amongst the most able speakers that I have seen at the Ath. He spoke clearly, he was humorous, he was engaging, he also lied quite a bit. History is replete with men such as the Ambassador. The lesson to draw from such examples is that despite their verbal talents, speaking well does not make one right.

The purpose of this piece is not to deal with the content of the Ambassador’s speech. I have already written on that topic as have others, such as Ilan Wurman, rather, I would like to address a broader point: the impact of freedom of speech.

If Imad Moustapha is indeed a plenipotentiary, that is to say that he acts as an agent of his country, then his words should be examined in great detail. He should be understood not as an individual, but as a representative of that state. When an ambassador speaks, he speaks for his country. I am glad that the Ambassador visited CMC. I am glad because here, unlike in Syria, one can freely challenge the assertions made by a person in a position of power. Here, unlike in Syria, we can disagree with a person of the Ambassador’s standing without fear of reprisal or retribution.

Since 1963 Syria has been in a ‘state of emergency.’ This has effectively removed the rights guaranteed to Syrians under their Constitution. Ronald Reagan used to say that difference between a democracy and a “people’s democracy” was like the difference between a jacket and a straightjacket. In theory, Syria has a constitution, in practice it operates like the mob. Journalists and dissenters disappear. Syria is, simply put, the Assad family business.

In 1948, Colonel J.G. Boswell gave Claremont McKenna College $50,000 for the James G. Boswell Professorship of American Economic Institutions, held by someone "in sympathy with the fundamental principles of the American system." For founding president George C. S. Benson, author of The New Centralization, the worry that Communists or Socialists would be infiltrating our college was a real one. He and J.G. Boswell would work together to "clean out the pinkos" from university lecture halls. "We are going to see that the graduates of one college in the country have a clear-cut conception of the values of American economic heritage," Benson told the Colonel.

Fast forward sixty years to a different president who has suggested Claremont's conservatism might be a thing of the past; to a civilization course that teaches Eastern – and therefore un-American and un-Western – multicultural pabulum; and fast forward to a campus where this year at least 75% of the campus voted for a candidate that called for a centralizing campaign to "spread the wealth around."

The Huffington Post reported just days after the election that Obama had offered Hillary Clinton the Secretary of State post. It was a bit premature but rumors continued to circulate for weeks and neither side came close to debunking them, which confirmed that it was indeed in the works.

It’s final now. And I think Hillary is a solid pick. There are downsides to this, but the decision was the right one.

Clinton is smart, well traveled (supposedly to over 80 countries), she (like Bill) is very popular and respected internationally, she knows many world leaders by first name and she has an understanding and appreciation for diplomacy. Her ideals fall closely in line with Obama's. Also, as inane as this may sound, the knowledge she gained during the Bill Clinton administration will be a valuable asset. And if there's one thing that’s kept the Clintons’ marriage together through all these years, it's that they still talk to each other.

Bill Clinton’s presidency was an era of foreign policy success – one of multilateralism and high global respect for the United States – and he left office with a commendably high approval rating. Having played a proactive role in the administration, Hillary Clinton has a stronger understanding today of the complexities and nuances of presidential decision-making than anyone alive who will ever run for president. The importance of an experienced leader at the helm of foreign policy cannot be understated.