Lately we’ve taken to calling Obama’s stimulus/infrastructure plan a pastiche of handouts to state governments and extensions of unemployment benefits, now with a tax cut thrown in. Compare this with what the Chinese Communist government is doing.
Obama wants to spend $775 billion in his stimulus package. The Chinese government, which doesn’t have to worry about pesky things like filibusters, or votes for that matter, has already put a $600 billion stimulus plan into motion, increasing business for early-cycle companies like BHP Billiton , Freeport-McMoRan and Joy Global . On top of that, they’ve announced a $40 billion plan to invest solely in the telecommunications industry.
We don’t know what kind of stimulus Congress will eventually pass, but with Obama making it sound like $775 billion is the upper limit, it looks like we’ll get a stimulus package that’s roughly the size of China’s.
That doesn’t make any sense whatsoever.
According to the World Bank, our nominal gross domestic product in the United States was more than four times the size of China’s in 2007. If you compare GDP using purchasing power parity, our GDP was still twice the size of China’s. So why the heck are our stimulus packages the same size?
Sure, China has $2 trillion in reserves and runs a budget surplus, so they’re more capable of spending big money. And right now I bet the Chinese Politburo is scared out of its wits that the proletariat will rise up if the government can’t keep their economy growing at an ultra-fast pace. But our economy is in much worse shape.
The Chinese Communists are spending hundreds of billions on stimulus to ensure that their economy will grow by 8% this year. We’re just hoping to prevent, in terms George Costanza would understand, too much economic shrinkage.
Let’s just hope Cramer's prediction that China would save the United States comes true, because we sure seem to have trouble saving ourselves. Failing that, maybe we should adopt the Chinese model of fewer elections and more revolutions.
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Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.
Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.
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