Thursday, May 12, 2005

Daniel Gross

Daniel Gross of Slate magazine has started "A Moneyblog" which is about money from a liberal point of view. Daniel sees the passage of the highway bill as big spending by republicans.

The bill calls for $11 billion more than President Bush wanted. This is the nature of highway bills. Representatives always try to add spending in their districts. To get a bill passed, a coalition always has to be found and these bills almost always exceed the initial request. Democracy is an ugly form of government but it is the best form of government. We live in a democracy but we also need to live in reality.

There is a big difference in Democrat-New-Deal type spending and road construction. Roads are one of the things that governments should provide. Gasoline taxes are paid specifically for this purpose. New deal spending was perhaps necessary during the great depression and big spending kept us out of a deep recession a few years ago, but building highways with funds already designated for the purpose is not a problem.

Deflation was a serious risk last year. Now the economy is growing at trend. Greenspan has raised short rates to take away the excess monetary stimulus to the economy. The federal government has already started taking away the fiscal stimulus; expenditures have been virtually flat for a couple of years and revenues just jumped from 15.3 trillion to 16.1 trillion; tax revenues are soaring.

Going over $11 Billion on a $284 Billion highway bill is not the most egregious spending we have seen. It will build us a few more roads (states will contribute matching funds), the money will come from the highway trust fund; no big or new deal!