When one has a major decision to make, it’s important to take a step back and understand not only the decision and its ramifications, but some key assumptions that lead you to the point of considering one’s various alternatives.  Are the known facts of the case correct or in error?  Does the line of reasoning being used justify other actions that one would not be willing to take?  Answering these questions take the actor above and beyond the pros and cons of the various options, but are far weightier toward the decision’s resolution.  These assumption-testers necessitate that the actor dig deep to act on principle.
 
It’s also important to note that, very often, the assumptions on which we act are not conscious.  They are, nonetheless, real and material and take with them objective, far-reaching consequences.  That they are unconscious often leads to a failure to examine our assumptions, but that really is no excuse to not do so.
 
So, let us consider the assumptions that are being taken on our behalf by our members of Congress on the pending economic “stimulus” bill.  Perhaps without realizing it, to consider the “stimulus” bill, one must first assume either or both of these:
 
1.)    That a drop in prices causes recessions/depressions,
or
2.)     Regardless of slowdowns’ causes, the economy cannot return to “normal” without government involvement.
 
The Cause of Economic Slowdowns
Not unlike the patient confusing the cure for the disease, many politicians and economists genuinely believe that a drop in prices causes economic slowdowns instead of correcting them.   The stimulus-supporter will argue that if prices fall, companies are squeezed out of business, increasing unemployment and/or lowering wages, which exacerbates the downturn.
 
Why do prices fall, though?  Prices fall for specific goods and services for a variety of industry- and business-specific reasons.  Over the aggregate, though, prices fall because the consumers of goods and services have a change in what Murray Rothbard would call “time preference.”  That is, they are growing in their belief that a penny in hand is worth two in the bush; they prefer larger cash balances (or less debt) for the future to larger spending today.  Another term for this might be “hoarding.”  Hoarding, though, is only a systemic problem in an economy with a variable amount of money.  With a fixed amount of money, hoarders only cause prices to drop; the purchasing-power of un-hoarded dollars, though, must go up, effecting no real (in this case, deflation-adjusted) change in the economy.
 
America, of course, does not have a fixed amount of money.  Unchecked by any commodity standard or Congressional oversight, the Federal Reserve mandates that the supply of money continually increases, and so the purchasing-power of un-hoarded dollars does not go up over time; it necessarily goes down.  That is not the fault of the dropping of prices; it’s the fault of a Federal Reserve that is the source of the same money supply increase.
 
In fact, a large savings rate has a number of advantages to the economy.  An economy’s ability to weather unforeseen storms is far cheaper and does not depend on the availability and price of credit to sustain.  Where there are no storms, a natural completely sustainable environment of lowered interest rates exists with high savings; the currency need not be devalued to have lower interest rates as Bernanke and the FOMC will tell you.
 
If, in fact, a drop in prices caused economic slowdowns, then doing anything possible to keep prices from dropping is the best course of action.  Borrowing on funds on top of current debt and printing dollars like they’re going out of style are two great first steps, and both will no doubt happen in the near future with future stimulus packages.  But they’re good practices if and only if a drop in prices causes depressions, as these efforts prevent prices from dropping.  The assumption, however, is wrong, and recognizing that the assumption should cause us to re-examine our decision to spend hundreds of billions of dollars in an effort to fight economic fate.
 
When suppliers react to the change in time preference, they must necessarily lower their prices to the point of stating a good case for the consumer to prefer their product over cash-in-hand.  Eventually, a new balance is found between the consumers’ preference for today’s spending or tomorrow’s cash balance.   Through the price system, resources are re-allocated toward delivering exactly what the consumer wants.  The free market finds that very quickly, though.  The interfered economy may never.
 
The Economy Cannot Return to Normal Without the Government
The second assumption that the stimulus-backer can take is that whatever the cause of the current recession, it’s not going to get better without some government involvement.
 
I would here argue that the American economy is a very resilient thing.  An economy charges on in spite of – not due to — multiple tiers of government placing uncountable regulations on seemingly every act of commerce imaginable.  Regulations and taxes do “create” growth in industries that cater to compliance of new laws and management of taxes; those businesses are sustainable only insofar as a golden goose exists to provide the taxes (the American taxpayer) and lending (Bondholders, China) needed to pay for it.  The rest of us, who are left to figuring out ways to sell our abilities in ways people will want to purchase, are left to comply with this behemoth on penalty of prison.
 
To this, the stimulus-supporter might argue that we aren’t talking about a tax hike or an increase in regulations, but rather an increase in government spending that will provide jobs and therefore spending.  Even if these jobs were sustainable (they’re not), and the aforementioned time preferences of these workers were to show they would spend everything today (very doubtful), the plan still fails.  There are three and only three potential sources of spending on any stimulus without a corresponding cut in spending:
 
a.)     an increase in taxes,
b.)    an increase in borrowing,
or
c.)     printing more dollars.
 
An increase in taxes is literally robbing Peter to pay Paul, while first paying Uncle Sam a finder’s fee in the form of government overhead; it does nothing to create real wealth.  An increase in borrowing necessitates the same at a future date, with interest, and depends on credit availability.  Going that route then requires private sector actors to actually compete for borrowed dollars with Uncle Sam, a competition they’re sure to lose.  And provided a market remains for the dollar after the printing extravaganza finishes, you’ve only delayed the point at which the consumer’s time preference returns to spending today, by virtue of devaluing the savings to which their trying to add.
 
On the other hand, trusting the American economy to once again self-correct, even given the weight of the State’s cross of tax and regulation, is far more sustainable, prudent, and just.  There is no conceivable reason to conclude that this time is different and that Uncle Sam need be involved now.
 
Conclusion
After considering the assumptions that one must take in order to support the stimulus bill now before us, one is left with really no good reason at all to support further government involvement.  Cutting taxes, cutting spending, auditing the Federal Reserve if not entirely eliminating it, and effectively removing the various state-sponsored hurdles on commerce that do exist would be far more fruitful than an $800 billion package that can only retard true growth.