April Public Forum Debate

My opponent does nothing to refute the reasons I consider his definition to be too restrictive. He simply restates his original argument. To be clear, I'm not asking that the stimulus package prevent or reverse a recession, what he is terming as solvency. That is beyond the scope of the resolution. What I am trying to prevent is the claim that any increase in GDP as a result of the stimulus proves that it has met its goals. In order for his argument to prevail, he must be able to prove that the result of the stimulus package is sufficient to justify the cost, especially if we consider the long term effects of the short term gain. Simply arguing that any mitigation would be sufficient is unreasonable by most standards. You could give me the $168 billion dollars Congress allocated to this effort, and I can assure you the domestic product of North Carolina would rise substantially. That doesn't mean we should do that. All I am asking is that the cost of the investment not outweigh the benefits, especially if it means delaying and perhaps worsening the long term consequences of our current economic patterns. If this package actually worsens (lengthens) the economic downturn by failing to address the real causes of our economic strife, then his proposition should be rejected on face. Goal 1, Consumer Spending. My opponent makes the false assumption that an 11% increase in consumer spending would be sufficient to not only increase Gross Domestic Product, but would result in an increase of the same percent of business profit. This is fallacious at two levels. First, there is the false assumption that a 1% increase in consumer spending translates to a 1% increase in profits. This ignores far too many variables, in particular the increase in cost of production (especially energy costs). There are significant inflationary pressures at play and thus the costs of production can chew up marginal gains in consumer spending. This results in little, if any, net effect on GDP. Second, this small gain in consumer spending will be competing with an overall decline in the value of the dollar. You have more dollars chasing the same products, again mitigating any economic benefit of pushing more dollars into the system. Finally, my opponent basically proves my argument about the restrictive definition here. According to him, if there is even a 1% increase in consumer spending, the package has met its goals. This is false at two levels. First, 1% may not offset or mitigate the impending slowdown as measured by GDP. Other factors besides consumer spending my offset any gains in this category. Second, if inflation spikes due to other factors or even because of the stimulus, as some have argued, his gains are completely negated. Goal 2, Business Spending Apparently my opponent missed the citation that said that businesses in general have difficulty in quickly adjusting capital budgets to accept the opportunity of additional investment. Simply put, it takes longer than a year to realize real GDP gains from an investment of this nature. This is compounded by the fact, also not rebutted, that this aspect of the stimulus package is hardly stimulating (pardon the pun). The stimulus package isn't going to gain business investment by spending more on office supplies. The investment must result in real domestic output for any GDP gains to be realized, especially in the time period that my opponent is burdened with. This goal is without question the weakest of the ones enumerated by my opponent. Without this succeeding, by his own standards, he has failed to meet his burden of proof. Goal 3, Raising home prices In this goal, my opponent reveals his lack of understanding in the housing markets and how their patterns of activity have actually created part of this mess we're in. The housing bubble has created artificially inflated prices for home. He wants this to continue. This unfortunately creates three problems. First, when the market corrects itself, as it is doing now, consumers are unable to realize the illusory equity gains they thought existed when their particular housing market was in the bubble. Houses stay on the market longer and prices inevitably decline. This is a long needed correction in the economy. The stimulus package would at best delay this correction and potentially make the eventual correction even worse. This is never refuted by my opponent. Second, the inflated price creates a demand for mortgage dollars that result in less than honorable lending practices, especially in the sub-prime and variable rate categories. We are witnessing the consequences of this in the number of foreclosures rapidly increasing. We were loaning people money they simply couldn't afford borrow because rates would inevitably go up, and their credit (due to fraudulent lending practices) never had the backing to sustain the mortgage in the first place. My opponent falsely believes that rising house prices will help this situation. I think I have proven the opposite to be true. The market needs to correct itself, whether we like it or not. Third, once the foreclosures do happen, the inflated value of the house results in lenders being unable to recapture even close to 100% of the value of the house, because people won't take on the inflated value once the bubble in that market has burst, as it has across much of the country. Finally, my opponent basically concedes the argument that this stimulus package could make things worse long term. His argument is that if the negative factors do not occur within a year, they are not worth considering. If the stimulus package results in an even longer recession, can we honestly call that a success? If we gain GDP from the package (which I still argue is suspect), but it fails to meet the threshold of actually mitigating the slowdown and, in fact, makes the slow down worse, how could anyone reasonably argue the stimulus successfully mitigated the economic slowdown? Answer: they can't, because it didn't. Why vote CON: 1. Any negative outcomes from the package, regardless of time frame, must be considered in weighing its success. This is especially true if the impact directly effects the economic slowdown, which my opponent has conceded has a risk of occurring. 2. My opponent has not proven that the stimulus meets any of its stated goals. 3. The stimulus is a short sighted and ineffective effort to hold off a recession that represents a natural fluctuation in the business cycle. Doing so runs the risk of making this current slowdown worse, which is an outright rejection of the benefits of the package that my opponent supports.