International Debate On Stimulus Spending Heats Up

Last Updated Sep 9, 2009 6:34 AM EDT

Many different governments around the world attempted to use stimulus spending to help their economies weather the world's economic downturn. Few plan to spend anywhere near as much as the Obama Administration and Democratic Congress in the United States are attempting to do. On top of this spending most have had to also increase the amount of money spent on social safety programs to help cushion the effect on their populations.

In politics the party not in power has to have a defining issue to separate themselves from the current one in power. In the United States, England, Canada and Australia the conservative opposition has seized on the amount of spending and debt the countries are taking on in an attempt to help their economies. Most of the European countries did attempt some stimulus spending but due to the smaller size of their economies, tax bases and budgets could not do to the level of the bigger nations.

In England the Conservative Party is basing their next campaign on reducing the amount of spending and borrowing being undertaken by the Labor Government. The Government facing massive defeat due to the unpopularity of Prime Minister Gordon Brown and his policies including supporting efforts in Afghanistan has begun laying the ground for a reduction in spending but fear that the cuts may be too harsh for their liberal supporters. The Conservatives are saying that not only would they increase the pace of cuts beyond what is planned by the current leadership but that they wouldn't have implemented last year's forty billion dollar stimulus plan. Although they did not offer much in the way of actual spending cuts they stressed that their party would be more fiscally responsible.

In Australia the opposing party plans to hold legislative hearings into how the Rudd Government executed stimulus spending. One particular program to build annexes and facilities at public schools. It is felt that not only is this a waste of spending as the money could have been spent to rehabilitate school facilities but it has not even be managed properly with those areas with the most need not receiving funds. They have also expressed concerns that like in the United States the continued borrowing and spending will lead to higher interest rates for not only government borrowing but all borrowing as well. This will limit the ability of the economy to recover and grow as the downturn ends.

In the United States the Republicans did not support the "Stimulus" bill that went through Congress except for three Senators of which one, Arlen Specter, has now switched parties to the Democratic side. There has been a great deal of criticism of the effect of this bill most commonly that the spending has not reached the economy fast enough to do anything of real value. Unemployment in the U.S. has continued to increase despite the extra $787 billion in borrowing for 2009. In a recent sign of lack of recovery in the nation's economy consumer credit continues to decline at a record pace as lending fell and worries about jobs spurred people not to borrow. Obama has gone from saying the money would immediately prevent job losses to now that it will have a real effect in future months.

There is no doubt that much of the criticism and complaints about the spending and its effects are related to politics. In the U.S. and England though there has not been many signs of recovery in the economy and this has made it hard to justify the massive amount of debt and spending. Of course the final verdict will be by the voters although this will happen earlier in the United Kingdom then in the U.S.

  • Matthew Potter

    Matthew Potter is a resident of Huntsville, Ala., where he works supporting U.S. Army aviation programs. After serving in the U.S. Navy, he began work as a defense contractor in Washington D.C. specializing in program management and budget development and execution. In the last 15 years Matthew has worked for several companies, large and small, involved in all aspects of government contracting and procurement. He holds two degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website, DefenseProcurementNews.com.