Support of One Kind, Stimulus of Another

We promised more commentary on religion and evolution and economics, and that is surely forthcoming. But other current events deserve their own notice as well.

Flight 1549 Support Group
Ordinarily we wouldn't think to quote to you from People Magazine. But we're really taken by the cover story in the current issue (February 23) about US Airways Captain Chesley Sullenberger and the passengers on Flight 1549 that landed in the Hudson River on January 15. We've had some flying lessons (many years ago) enough to appreciate that when he says he was just doing his job that day, he really means that. The training and his experience as a glider pilot mean he knew how to angle the plane "just so" to have the plane skim along the water rather than plunge into it. Obviously, though, the extraordinary results have heartened us all, especially at a time when we need to have some genuine heroism in our lives. People highlights this in relating that the Captain was introduced last week to the audience at a Broadway show performance, and they roared spontaneously in a standing ovation.

The People story tells us something else about the aftermath of that flight. It was a truly traumatic experience for the passengers, and they've had some aftereffects. The magazine's reporters talked to a number of them about how they're feeling. While some immediately got back on airplanes and continued to go about their business, others have felt real dis-stress. They have formed an email chat group with each other and report needing to talk to the others on the plane. We've also had a serious traumatic experience – of a whole different sort, but a similar magnitude – and we can identify with one woman's comment that "no one else understands, like someone else who was on the plane."

This is what support groups are about in general, and having started one for our particular need almost 25 years ago when there weren't any close by, we can feel warmth and gratitude that society and culture today almost automatically foster this mutual self-aid and fellowship. God be with these people as they heal and move on! Read their stories in the People article (in the magazine only, and apparently not online), and please remember these good folks in your prayers.

Fiscal Stimulus
At about 3:00PM today, Eastern Time, President Obama will be signing into law H.R.1 The American Recovery and Reinvestment Act of 2009, which Congress passed last Friday, February 13. The signing is taking place, not at the White House, but in Denver, at a museum building where electricity is provided by solar panels. This is presumably meant as a symbol of some of the initiatives in the massive legislation, which offers $787 billion all told in stimulus spending and tax relief, of which $50.8 billion is targeted toward energy spending projects and $20 billion more in energy-oriented tax cuts and credits. As we've mentioned here before, education, health care and infrastructure spending get considerable attention as well. The so-named "individual aid" provisions include a $400 tax credit per person, payable through reduced withholding, a 13% increase in food stamp benefits, tax credits for first-time homebuyers, deductibility of sales tax on new car purchases, tuition tax credits, a subsidy for the unemployed to help them pay COBRA health insurance costs, and numerous other specialized items. You should see some of this personally up in the Spring, as soon as the IRS can revise the withholding tables to reflect the tax credit and your paycheck increases, maybe $25 at a time. If you want to watch all of this happen, look on a special stimulus program website: http://www.recovery.gov/.

An analysis released by the Congressional Budget Office (CBO) last week indicates that the stimulus program can help the economy, adding perhaps 2-1/2% to economic output by the fourth quarter of this year over what it might be otherwise. This would produce a slim rise in gross domestic product (GDP), instead of a 1.5% contraction previously expected in CBO's base-case forecast. The unemployment rate, which was 7.6% in January, might be held to 8.1% in the fourth quarter instead of the 9.0% projected in the base case.*

Despite the improved economic prospects, the stock market has not exhibited much enthusiasm. Today, the Dow Jones has fallen about 250 points and is trading just about 50 points above its recent multi-year cycle low, touched briefly in December. Investors aren't finding much to lift their spirits. New allegations of fraud were voiced today against still another big-name money manager. The highly touted bank bailout plan announced last week by the Secretary of the Treasury turned out to show little in the way of concrete moves forward and was seemingly focused more on enforcement actions. The stimulus bill itself includes a provision tightening pay caps on executives of banks that are receiving government capital funds; this is the government's prerogative as a major shareholder now in these institutions but it goes against the whole financial industry's mindset. While the move may sound desirable from an ethical point of view, it won't encourage renewed investment activity. And throughout the day, markets waited uneasily for the release of plans from General Motors and Chrysler, updating their own bailout status and prospects.

Sigh. Listless investors, with little uplifting to break them out of it. Well, consumer spending, according to broad data on shopping at retail stores and online, did increase unexpectedly in January. Wal-Mart today reported earnings for its January quarter that were down from a year ago, but noticeably better than stock analysts had predicted. So all is not lost, and the activity from the multitude of stimulus programs can generate movement in many sectors which should all get under way fairly soon. Maybe watching the money flow out through the Recovery website will help us grasp it more tangibly and act with more confidence.

*Congressional Budget Office. Letter to the Honorable Judd Gregg, February 11, 2009, page 5. and The Budget and Economic Outlook, Fiscal Years 2009-2019. January 2009. Both available on http://www.cbo.gov/. We've quoted the midpoints of ranges in CBO's Outlook document.