I read a very interesting article on CNNMoney.com about the need for the economic stimulus and why other proposals, such as giving the money directly to taxpayers might not be the best idea.
A lot of the article made sense to me, and I don't feel quite as uptight about what is going on in Washington.
On the other hand, a lot of it sounded like it could be propaganda. If given enough time, you could write a persuasive article for just about anything.
For me, the real question is why would anyone actually interested in the long-term welfare of this country wish to add another $1,000,000,000,000 to our deficit to knock a few months off a recession that will correct itself within a couple years at most?
In the end, it boils down to my lack of trust in the government agenda. I feel that although something might need to be done, this "stimulus plan" is not based in an effort to revive the economy. If left alone, the economy will rebound on its own like it always has and always will. It might take two or three years of pain, but this pain is essential to creating a healthy economy in the future.
The "spendulus" might knock a couple months off the length of this recession. But is that really worth adding $1,000,000,000,000 to the national deficit? Worse yet, is it worth the guaranteed inflation that will haunt us on the other side of the recession?
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Monday, February 9, 2009
Monday, February 2, 2009
Economic Stimulus Q&A
This year, taxpayers will receive an Economic Stimulus Payment. This is a
very exciting new program that I will explain using the Q and A format:
Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV
set, thus stimulating the economy.
Q. But isn't that stimulating the economy of China?
A. Shut up.
very exciting new program that I will explain using the Q and A format:
Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV
set, thus stimulating the economy.
Q. But isn't that stimulating the economy of China?
A. Shut up.
Wednesday, January 28, 2009
How will the stimulus package help?
The article What Are They Buying? by Thomas Sowell can be found on National Review.
Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it.
The government is putting money into banks, even when the banks don’t want it, in hopes that the banks will put it into circulation. But the latest statistics show that banks are lending even less money now than they were before the government dumped all that cash on them.
Even if it had worked, putting cash into banks, in hopes that they would put it into circulation, seems a rather roundabout way of doing things, especially when the staggering sums of money involved are being justified as an “emergency” measure.
Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate, and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved.
Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010.
Using long drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.
If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit-card purchases beforehand.
If all this sound and fury in Washington was about getting an economic crisis behind us, tax cuts could do that a lot faster.
None of this is rocket science. And Washington politicians are not all crazy, even if it sometimes looks that way. Often, what they say makes no sense because what they claim to be doing is not what they are actually doing.
No matter how many times President Barack Obama tells us that these “extraordinary times” call for “swift action,” the kind of economic policies he is promoting take effect very slowly, no matter how quickly the legislation is rushed through Congress. It is the old Army game of hurry up and wait.
If the Beltway politicians aren’t really trying to solve this crisis as quickly as they could, what are they trying to do?
One important clue may be a recent statement by President Obama’s chief of staff, Rahm Emanuel, that “A crisis is a terrible thing to waste.”
This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government’s power while the people are too scared to object and before any opposition can get organized.
That is why there is such haste to do things that will take effect slowly.
What are the Beltway politicians buying with all the hundreds of billions of dollars they are spending? They are buying what politicians are most interested in—power.
In the name of protecting the taxpayers’ investment, they are buying the power to tell General Motors how to make cars, banks how to bank, and, before it is all over with, all sorts of other people how to do the work they specialize in, and for which members of Congress have no competence, much less expertise.
This administration and Congress are now in a position to do what Franklin D. Roosevelt did during the Great Depression of the 1930s—use a crisis of the times to create new institutions that will last for generations.
To this day, we are still subsidizing millionaires in agriculture because farmers were having a tough time in the 1930s. We have the Federal National Mortgage Association (“Fannie Mae”) taking reckless chances in the housing market that have blown up in our faces today, because FDR decided to create a new federal housing agency in 1938.
Who knows what bright ideas this administration will turn into permanent institutions for our children and grandchildren to try to cope with?
I think the point that really needs to get across is that the politicians don't have an interest in solving the problem facing the country. They all know the economy would correct itself if left alone for a year or two. This feels more like a consolidation of power and a move towards a more socialist and centralized government than an actual attempt to rescue the economy.
Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it.
The government is putting money into banks, even when the banks don’t want it, in hopes that the banks will put it into circulation. But the latest statistics show that banks are lending even less money now than they were before the government dumped all that cash on them.
Even if it had worked, putting cash into banks, in hopes that they would put it into circulation, seems a rather roundabout way of doing things, especially when the staggering sums of money involved are being justified as an “emergency” measure.
Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate, and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved.
Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010.
Using long drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.
If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit-card purchases beforehand.
If all this sound and fury in Washington was about getting an economic crisis behind us, tax cuts could do that a lot faster.
None of this is rocket science. And Washington politicians are not all crazy, even if it sometimes looks that way. Often, what they say makes no sense because what they claim to be doing is not what they are actually doing.
No matter how many times President Barack Obama tells us that these “extraordinary times” call for “swift action,” the kind of economic policies he is promoting take effect very slowly, no matter how quickly the legislation is rushed through Congress. It is the old Army game of hurry up and wait.
If the Beltway politicians aren’t really trying to solve this crisis as quickly as they could, what are they trying to do?
One important clue may be a recent statement by President Obama’s chief of staff, Rahm Emanuel, that “A crisis is a terrible thing to waste.”
This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government’s power while the people are too scared to object and before any opposition can get organized.
That is why there is such haste to do things that will take effect slowly.
What are the Beltway politicians buying with all the hundreds of billions of dollars they are spending? They are buying what politicians are most interested in—power.
In the name of protecting the taxpayers’ investment, they are buying the power to tell General Motors how to make cars, banks how to bank, and, before it is all over with, all sorts of other people how to do the work they specialize in, and for which members of Congress have no competence, much less expertise.
This administration and Congress are now in a position to do what Franklin D. Roosevelt did during the Great Depression of the 1930s—use a crisis of the times to create new institutions that will last for generations.
To this day, we are still subsidizing millionaires in agriculture because farmers were having a tough time in the 1930s. We have the Federal National Mortgage Association (“Fannie Mae”) taking reckless chances in the housing market that have blown up in our faces today, because FDR decided to create a new federal housing agency in 1938.
Who knows what bright ideas this administration will turn into permanent institutions for our children and grandchildren to try to cope with?
I think the point that really needs to get across is that the politicians don't have an interest in solving the problem facing the country. They all know the economy would correct itself if left alone for a year or two. This feels more like a consolidation of power and a move towards a more socialist and centralized government than an actual attempt to rescue the economy.
Wednesday, January 21, 2009
If I Were President: The Economy
I believe in the constitutional provision for separation of church and state. I wish there were an additional separation of economy and state.
If I were president, I would do all I could to get government out of private business as much as possible.
I believe in less regulation.
I believe in lower taxes.
I believe in free trade, not only within the country, but also internationally as well.
What about all the problems with the current economy? I know it hurts, but it's part of the ebb and flow of a free market. For too long, we the people have been living beyond our means, and it's time that we face the consequences. The biggest problem I have with the current environment of bailing out every failing industry is that these industries created the problems themselves. We need to bring back accountability to the free market. They should have to face the consequences, up to and including failure and demise. The lesson they should learn is to be better prepared for swings in the economy. The lesson they ARE learning is that it's okay to play the risk game knowing that the government will bail you for your bad decisions.
What about job losses created by the failure of businesses? It's unfortunate that people who work for these companies lose their jobs, when they generally are innocent bystanders. There is little they can do to avoid this mess. But I firmly believe that new jobs will always be created by stronger, better managed companies. There are jobs for everyone if they are willing to do whatever it takes to land a job, even though it might mean working for less pay or in a new industry or profession.
The best thing for the economy right now is to lower taxes. This would mean more money in the pockets of those who are willing and able to spend it. Lower taxes would lead to the creation of new jobs. The other side of the equation would be a massive reduction in government spending. I am a proponent of getting the federal budget balanced. This is becoming harder and harder with each new bailout. Under my direction, the government spending would be slashed tremendously. No more earmarks. No more pet projects. No fluff. We'd get our debt back under control.
There will always be down times in a free economy. We just need to learn to prepare for these down times. It's a tough lesson to learn, but we the people can accomplish anything.
If I were president, I would do all I could to get government out of private business as much as possible.
I believe in less regulation.
I believe in lower taxes.
I believe in free trade, not only within the country, but also internationally as well.
What about all the problems with the current economy? I know it hurts, but it's part of the ebb and flow of a free market. For too long, we the people have been living beyond our means, and it's time that we face the consequences. The biggest problem I have with the current environment of bailing out every failing industry is that these industries created the problems themselves. We need to bring back accountability to the free market. They should have to face the consequences, up to and including failure and demise. The lesson they should learn is to be better prepared for swings in the economy. The lesson they ARE learning is that it's okay to play the risk game knowing that the government will bail you for your bad decisions.
What about job losses created by the failure of businesses? It's unfortunate that people who work for these companies lose their jobs, when they generally are innocent bystanders. There is little they can do to avoid this mess. But I firmly believe that new jobs will always be created by stronger, better managed companies. There are jobs for everyone if they are willing to do whatever it takes to land a job, even though it might mean working for less pay or in a new industry or profession.
The best thing for the economy right now is to lower taxes. This would mean more money in the pockets of those who are willing and able to spend it. Lower taxes would lead to the creation of new jobs. The other side of the equation would be a massive reduction in government spending. I am a proponent of getting the federal budget balanced. This is becoming harder and harder with each new bailout. Under my direction, the government spending would be slashed tremendously. No more earmarks. No more pet projects. No fluff. We'd get our debt back under control.
There will always be down times in a free economy. We just need to learn to prepare for these down times. It's a tough lesson to learn, but we the people can accomplish anything.
Tuesday, December 23, 2008
New Stimulus Details
You can read more about Obama's new stimulus proposal here.
I know this plan will help a lot of people. A number of the large construction companies will see a great deal of increase to their bottom lines. This will be quite a windfall for a number of government contractors. Hooray for them!! I'm sure a large number of blue-collar jobs will be created as a result of the infrastructure work that will be taking place. And believe me, I am all for improving our country's infrastructure.
But does this plan help you and me? I don't see any relief coming for distressed homeowners. I don't see this solving the mortgage crisis. I don't see this stimulus unfreezing the credit markets (and I will be speaking more on this at a later date). In fact, on the surface of the plan, I see absolutely nothing in it for me except a tax increase.
I want our economy to succeed. I want people in general to succeed and find happiness. Will the stimulus plan help get us out of a recession? Maybe. Nobody really knows. There has never been a recession quite like this one. The recession will supposedly end at some point without any government intervention. The stimulus plan is being proposed to hurry the end of the recession. Is it worth $800 Billion to end the recession a few months early?
I know this plan will help a lot of people. A number of the large construction companies will see a great deal of increase to their bottom lines. This will be quite a windfall for a number of government contractors. Hooray for them!! I'm sure a large number of blue-collar jobs will be created as a result of the infrastructure work that will be taking place. And believe me, I am all for improving our country's infrastructure.
But does this plan help you and me? I don't see any relief coming for distressed homeowners. I don't see this solving the mortgage crisis. I don't see this stimulus unfreezing the credit markets (and I will be speaking more on this at a later date). In fact, on the surface of the plan, I see absolutely nothing in it for me except a tax increase.
I want our economy to succeed. I want people in general to succeed and find happiness. Will the stimulus plan help get us out of a recession? Maybe. Nobody really knows. There has never been a recession quite like this one. The recession will supposedly end at some point without any government intervention. The stimulus plan is being proposed to hurry the end of the recession. Is it worth $800 Billion to end the recession a few months early?
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