|01-08-2009, 06:19 PM||#1 (permalink)|
My New Beginning!
What good is a spending "stimulus?"
Three Reasons a Spending 'Stimulus' Is a Bad Idea
Liberals in Congress and the incoming Obama administration want to spend a trillion dollars— or potentially more — of taxpayer money as part of an economic recovery plan. This is over 50 percent more than our annual defense budget, and over five times California's annual budget! And that would be on top of all the other big-government spending.
But government spending plans do not stimulate the economy. They are based on the idea that feeding “new” money into the economy will create economic growth. But the money isn’t new—it’s either taxed or borrowed. It's essentially redistributed from one group of people to another, and no new money is created. (More)
1) The private sector—not public spending—drives growth. Economic growth comes by individuals and entrepreneurs operating in free markets, not by Washington spending and regulations. Massive spending hikes in the 1930s, 1960s, and 1970s all failed to increase economic growth rates. (More)
2) Giving money to states does not increase growth. Increasing federal borrowing to keep state taxes from rising is like running up a Visa card balance to keep the Mastercard balance from rising. State taxpayers are also federal taxpayers, so those being bailed out will still have to bear the costs in the end. (More)
3) Highway spending does not create jobs. It merely transfers jobs and income from one part of the economy to another. As Heritage Foundation expert Ronald Utt has explained, "The only way that $1 billion of new highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven." (More)
A better way to stimulate the economy is to make the tax cuts permanent (unlike Obama's tax plan), to lower corporate tax rates, and to expand domestic energy supplies. Tax cuts give incentives to work, save, and invest, thus creating jobs and increasing economic growth. Expanding drilling for oil, shale, and natural gas will cause energy prices to fall and create private sector jobs without government subsidies.
|01-09-2009, 09:51 AM||#6 (permalink)|
Join Date: Aug 2007
Location: Your pants
Blog Entries: 1
Ok there are a few points to that site that are valid but it's surrounded by so much epic fail, they're hard to find. Seriously I don't know where that guy learned economics but he should ask for a refund.
Government spending stimulus isn't bad. It's not great either. What the Pres elect hopes to do here is to put money into the private sector while increasing federal debts in the hopes that said debt will stimulate more lending. The financial world is driven by debt and lending. If there was no debt, there would be no economy. We'd all be living in stick houses digging in the dirt for grubs to feed ourselves. Without going into a full explanation, banks ability to lend depends largely on the amount of debt they've purchased. Hence why all the defaults have thrown a big hiccup in the mix.
Now, I was actually watching cspan (I had severe insomnia and there was NOTHING else on) right after the AIG bailout when the committee met to discuss our roads/rails and transportation infrastructure. In a nutshell, it was in shambles from half a century of neglect. They were pointing out that without spending NOW we could be crippled within the next 15 or so years. What Obama has done is taken that need and packaged into a "Plan to invest and create jobs". Total BS but hey that's politics. At least he's tackling the situation.
So the fed will take on more debt and put money into these needed projects and because of the need, contractors will see a nice windfall in profits (overtime pay, high rates for services etc etc). In the end, those workers will dump portions of that money back into the services and retail sector. It's not great but it's a start AND we fix our ailing infrastructure.
Now as for the comment on lending states money. It's about as accurate and saying the moon is made of purple whale blubber and monkey spunk. However, I agree it's a BAD idea. Lending states more money makes them indentured to the fed. This is the exact opposite of how our government is supposed to work. It takes power from the states and placing more with the national government. Our founding fathers wanted a strong and stable government without making the states weak. In essence, taking power from the states is taking power from the people.
The public sector does indeed drive growth. Lower corporate taxes means higher salaries for employees and more jobs. I don't agree with the "TAX THE CORPORATIONS!" rabid bandwagon. They want to make money. They need to grow to do that. Growth of companies overall drives our economy. When you tax them more, they will find ways to pass that tax along and keep their profit margins increasing. To do this they will cut jobs and increase costs for services. It's just like raising minimum wage. Sure people on minimum wage will be happy at first. Until they start paying $10 for a McDonalds cheeseburger. Companies will pass those costs along driving up inflation cutting into the debt ratio that allows banks to make the world turn.
Seriously man, if you're going to quote talking points, at least make sure the guy you're quoting isn't talking straight out of his colon.
I have a word limit on my cynicism