Congress Should Be Judicious with Stimulus Package

Congress should exercise restraint in any stimulus package following Fed Chair Bernake's comments last week. Any stimulus package should be small, short-lived, and focused on helping the neediest people.

I agree wholeheartedly with the logic behind Congress using fiscal policy, in concert with the Federal Reserve's monetary policy, to even out the economic cycle. It makes sense to stimulate the economy with deficit spending during a recession and to run a surplus or at least balanced budgets during expansions. The hard part to this is finding the discipline to balance the budget when the time comes instead of simply finding a new reason to borrow money.

A radical idea for the future along this line would be to create an independent fiscial policy committee, similar to the Federal Open Market Committee, that would set a value for the federal budget deficit/surplus each year. Congress would be allowed to spend as much or as little as it liked, as long as the deficit equaled the value set by the fiscal policy committee. This would prevent decisions like the stimulus package being discussed today from being overly influenced by politics. This is, of course, a radical long-term idea far beyond the scope of how Congress should respond to Bernake's comments today.

In the coming days, I hope to see Congress pass only a minimal stimulus package directed at families living near the federal poverty line. Stimulus money spent on the truly needy will help the economy more and do far more good than money directed to people earning the median income or higher.