Minnesota's state government is facing a projected $4.8 billion budget deficit which could easily grow to $6 to 7 billion when the March forecast comes out. The $780 billion federal economic stimulus bill could send up to $2 to 3 billion to the state to plug the gap. Along with it will be strings attached on how the money should be spent.
All of this is an exercise in economic foolishness. The federal government is merely allowing state governments to put off the day of reckoning. They are enabling, tempting state's to not make the tough decisions now. In addition policymakers assume that the national debt will not impact us here in Minnesota. It's as though the federal government and economy are free from the laws of economics. The trillions of dollars in new debt won't come back to haunt us some day.
Earlier this week Obama's Treasury Secretary Timothy Geithner suggested the Treasury Department and the Fed will spend another $2 trillion to keep things afloat.
Together, the stimulus plan in Congress and the financial rescue plan being overseen by Treasury and the Fed could end up marshaling nearly $3 trillion toward revitalizing the economy, and the enormity of the task is contributing to anxiety among policymakers, corporate America and individual investors and consumers.
At the heart of the problem is the unwillingness of us as a society to live within our means. It's a radical "live for the moment", me-centered mentality. There's no thought of the long range implications of what we're doing.
"We're really operating in uncharted waters. The stimulus package and the financial-institutions rescue package are really crap shoots. We really don't have any sense of how they're going to work out," said Ross Baker, a Rutgers University politics professor. "We're really talking about remaking the American economy and the banking system."
All indications are the wake up call of our economic problems from the last several months hasn't woken up a lot of people.