Rangel's economic "hemorrhage"

On January 7, 2009, there was a meeting between Robert Reich, Pres. Obama's economic adviser, and the Way's and Means Committee. There are a few things there, but the thing I want to address came from Representative Charles Rangel in a discussion of providing economic relief money in order to save and promote local and State economies.

"Governors are going to be forced to find some formula to find out how we can get the money where the hemorrhages are."

I have two problems with this short statement. First, "governors are going to be forced..." Really? I don't mind the government saying, "Hey, we are sending you money for high risk areas. Put something together so we can make sure it all gets where it is needed." The problem I have is the transfer of responsibility. Instead of the "unity" we keep hearing about, the goal is to pass the buck to the governors. This sets a precedent. If the money doesn't make it, it's the governors fault. There is no unity, there is a sign off, a transfer of responsibility. "Here is that box of money, it's all in your hands now." I don't like constant federal over-watch, but come on. How hard is it for them to work together to put something together?

That is actually a small thing, one that I may change my mind on later, but there is another element that bothers me most and it is an issue of "common sense." He was talking about pushing money to the "hemorrhages." Medterms.com defines a hemorrhage as "Bleeding or the abnormal flow of blood." It comes from two separate Greek words, one meaning blood and the other "to break free." So Rep. Rangel is saying that there is a constant economy "leak" in these areas.

There was a man living in a small European village who was selected to refill the towns water reservoir after it leaked onto the ground. The man ran from the stream to the reservoir, filling it one bucket at a time. Whenever it reached the small crack, though, the water would drain. When he realized that he was making no progress, he gathered more men, each with larger buckets than his first. Back and forth they ran, filling it bucket after bucket. Finally, the water lever kept rising, even as it was leaking. They filled the reservoir to the top and finally, were able to rest. While they were idle, the water drained through that crack. The next morning, the men saw the reservoir empty again so they began filling it, running from the stream to the reservoir. They did this everyday, and the reservoir emptied every night.

Congress' solution of sending money where these economic hemorrhages are is akin to trying to fill a broken bucket: you may get it to the top, but it will still drain out. But they are not seeing this. All they are seeing is the reservoir is filling, ignoring the fact that there is a reason it is empty every morning. What the villager should have done was let the reservoir empty, repair the crack (or replace the reservoir, but that is a different argument) and then fill it. Likewise, Congress needs to not throw money at these problems but instead, find where the "crack" in the economy is and work to repair it. Once the repair is done, we can send money to give it a kickstart.