Commentary: We need to do what we can to keep economy growing
Earl Cutlip, in his letter to the editor titled “The nation is in debt, why spend more?” in the Feb. 3 edition of the Northern Virginia Daily, notes that the economy is in an upswing and that the nation is already trillions of dollars in debt, and asks one of those people who voted for President Barack Obama to explain why the federal government should spend even more money.
Well, here is my answer, but first a couple of questions, a statement that you may or may not agree with and a little story.
Questions: How many of you feel like you are in a good financial situation? And, although the economy is still growing, does the fact that economic growth slowed down a little bit in the fourth quarter of last year make you feel any better?
Statement: The fact is that the U.S. economy is a consumer-driven economy — 70 percent of our gross domestic product is due to people like us spending money for consumer goods.
The story (true): Joe wanted to take his wife to a fancy hotel for a Valentine’s Day celebration. He wanted the room to be real nice, so he goes to the finest hotel in the valley and explains his situation to the desk clerk. And of course the desk clerk has the perfect room for the occasion. Joe asks if he can see the room and the clerk says yes, but that he can’t leave to show it to him right now. For a $100 security deposit, the desk clerk says he can give him the key to the room so that he can inspect it. Joe agrees, leaves the desk clerk a crisp $100 bill, takes the key and goes off to check on the room.
While he is gone, the desk clerk runs over to pay his mechanic $100 that he owes him. The mechanic takes the $100 bill to the auto parts store to pay his bill there. The owner of the auto parts store takes the $100 bill and runs over to pay off his tab with the local grocer. The grocer take the $100 bill to his landlord to pay off the back rent.
The landlord takes the $100 bill and pays his cleaning lady. His cleaning lady takes the $100 bill and rushes over to her hair stylist to pay her bill. And the hair stylist takes the $100 bill and runs over to the fancy hotel and pays her bill from a previous stay and just in time, too, because Joe is just coming down from his room inspection; and, having decided not to take the room after all, gets his security deposit back from the desk clerk and walks out the door, leaving six different people feeling $100 richer and all making plans for how they will spend it on Valentine’s Day. Joe has just stimulated the local economy and it did not cost him a thing.
While the rest of the world seems to be going into recession, thereby reducing the demand for our exports, we need to do whatever we can to make sure that our economy keeps chugging along.
So I ask, Cutlip and other Northern Virginia Daily readers, why not borrow a little (OK, a lot) more money to improve our decaying infrastructure while the investors of the world are happy to lend us the money at near zero interest rates? We are either going to have an infrastructure deficit or a financial deficit anyway — one or the other. Take your pick.
Spending money on infrastructure will create lots of new construction jobs, putting money in the pockets of construction workers who will then spend it here in the valley. Taxes will be paid on that income and the government can use the extra revenue to pay down the debt.
Waller H. Wilson is a Front Royal resident.