Protectionism? Maybe, but so what.

What is the purpose of the US economic stimulus package? The answer is relatively simple, to stimulate the US economy. So why would anyone question whether there is a provision in the stimulus to buy American? I support free trade and am not a fan of most protectionism, but that is not really the point since this has nothing to do with trade policy or general spending. Without focusing the stimulus on domestic industries, I am afraid that two things will happen; the stimulus will not be sufficient enough to stimulate the domestic economy due to stimulus dollars going elsewhere, and the US will be paying for failed stimulus to other nations.

The stimulus package needs to focus every dollar it can to the domestic economy. As Paul Krugman points out in his The Conscience of a Liberal post; “if macro policy isn’t coordinated internationally — and it isn’t — we’ll tend to end up with too little fiscal stimulus, everywhere.” This is why President Obama wanted to coordinate stimulus with the G20 nations.

I have always said that I do not mind paying taxes. I was fortunate enough to be born into a middleclass family in one of the greatest countries on earth. Paying taxes is just the cost of having the privilege of living here, as it is in any country. Taxes are not for raising money to stimulate the economies of other countries, that is the job of their governments. I think it is fine when it is for humanitarian purposes or to support national interests, but not as part of a domestic stimulus package and especially when we need to get our economy going first.

In short, our government needs to focus on improving our economy and making sure the stimulus is as effective as possible for the domestic economy. Improving the US economy will provide more long term benefit to the world economy then the lost, to external countries, stimulus would provide.