What's more, people need to realize that a president may propose a bill, or a budget, and the president signs the bills to make them into law, but it's Congress that constructs and passes the bills to begin with, and who has the authority over the national purse-strings. The fact is that both sides of the aisle spend more money than the nation has and they are just feeding the problem. If we are going to reign-in government spending, it has to be Congress that does it, but a president with some guts would help, too.
Oh, and by the way, thank your kids for this, since they're the ones who'll be paying for it for the rest of their lives.
On the bright side, though, the Republicans are playing this one smart. All but three of them are opposing the stimulus plan. This sets them up to point the accusing finger at the Democrats come election time. I just hope that they can keep being frugal, but I doubt it.
* To be fair, the stimulus plan is actually $838 billion***, but let's consider how much that really is:
- That amount would by 3,352,000 nice $250,000 homes.
- It would buy two school lunches for every elementary and secondary school student (55,000,000) in the country for every day their entire school career, from 1st grade to high school graduation (assuming they all graduate), and you would still have money left.
- It could send 4 million students to Harvard, for all four years of their Bachelor's Degrees. I wonder what kind of education system would we have if we put even half of this money into it.
** To give you an idea of how much $2.5 trillion really is:
- If my calculations are correct, 2.5 trillion miles is about how far light would travel in about six months, at 186,000 miles per second.
- The distance from the earth to the sun is 93 million miles; 2.5 trillion miles is enough to go to the sun and back 134,408 times.
- With $2.5 trillion, you could buy a billion nice new cars (at $25,000 each). To park them all, you'd need a parking lot the size of Massachusetts.
- The amount of $2.5 trillion would be enough to buy $250,000 homes for 10o million families. So basically, you could by a decent home for every family in the United States with this amount of money. Maybe that's what they should do.
Thanks to my bro-in-law for this:
What a profound and short little paragraph that says it all!!!
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of ANY nation. You cannot multiply wealth by dividing it."
- Dr. Adrian Rogers, 1931 - 2005
17 comments:
If he keeps this up, I think there's a chance he won't get reelected. Although that depends on who the Republicans choose to run against him. Hint: Mitt Romney! The "stimulus" is obviously not going to work and might even make things worse. It's possible America will see that we need someone who knows how to turn things around.
There's a chance, but it's a slim one, because he's so charismatic and people are so stupid.
Look at the changes I made to the post--amazing.
The stimulus plan was Bush's idea. (Why does everyone keep forgetting that?) And frankly, we need it. It's a time of global crisis, a crisis worse than terrorism, a crisis wrought by greed. Most major economies are planning stimulus plans like this. Basic Keynesian economics reveal that Public Works are great for the economy. That's why Egypt built pyramids and China built walls. I am bothered by the constant complaints from people arguing about the stimulus with moot points, lots of politicizing, and no knowledge of the economic necessity. The U.S. is the strongest economy in the world, $13.8 trillion (compare China, $3.4 trillion). If you're willing to believe in 2003 that your government knows that Iraq had weapons of mass destruction, why aren't you willing to believe that all the world's top governments and economists are warning of an extremely severe global financial crisis? The money is not going to be used to buy school lunches, or line dollar bills end to end to the sun and back, of even to pad CEO's pocket books. The money is going to be used to keep businesses afloat, and that translates to jobs for moms and dads, who can keep their homes and feed their children. Utter shame on anyone who continues to politicize this without understanding the first thing about it.
Nobody is arguing about whether or not we need a stimulus. It's whether or not THIS package will work. I'm willing to bet it won't since the vast majority of the money is being spent on things that will have little to no effect on the economy.
The best stimulus plan they could do is cut taxes, including the capital gains tax and corporate taxes. IF there is spending it should be on projects that are ready to go NOW, or projects that are a long term investment such as building nuclear power plants. Public works projects might be great for the economy but cutting taxes to put money back into the hands of the people and businesses is even better.
Hi Angela,
"I'm willing to bet it won't since the vast majority of the money is being spent on things that will have little to no effect on the economy."
I'm willing to bet you can't substantiate that. ;)
And I fully agree with you on capital gains.
Richard,
"...because he's so charismatic and people are so stupid."
And John McCain's non-charisma is a plus? And Sarah Palin is so brilliant?
Hi, Peter, it's been a while.
I never said that McCain and Palin were the bee's knees, but Obama is/was certainly not my preferred candidate.
I agree that we do need some kind of economic stimulus, but the question is what kind. I think the best kind of stimulus would be deep, permanent tax cuts and maybe some tax rebates.
I don't think it matters that the stimulus was Bush's idea, I don't really care (we could justifiably lionize him or vilify him for it, depending on our perspective), what matters is that they have taken the ball and are running with it--clear out of the park.
"...what matters is that they have taken the ball and are running with it--clear out of the park."
I guess I just don't see it that way.
Can you substantiate this hyperbole, or do you think it's more of a (politicized?) knee jerk reaction?
(I guess it seemed like a politicized reaction based on the language of the original post.)
Happy Valentine's Day!
Hi Richard,
Responding to Peter. No one is arguing that there is a financial crisis. The disagreement is on what to do (or not do) about it. Government meddling in the free market and overspending is what got us into this mess. More government meddling and spending is not going to fix it. Learn from history, government meddling extended the great depression unnecessarily. What government needs to do is cut spending and cut taxes, the free market will take care of the rest.
Hi David,
"Government meddling in the free market" did not create the financial crisis! The greed of the unchecked free market created the financial crisis.
Rules were ignored and broken to extend loans to people who could never pay them back. Those loans were packaged and sold to all kinds of investors all over the world. In the past 9 years—with the rise of India, China, and the strengthening EU—the global pool of annual investment rose from $30 trillion to $70 trillion.
One of the safest investments of the last few decades is the American housing market. So all that extra money floating around the world—just itching for a good investment—is being managed by stockbrokers and hedge fund managers whose job is to make sure their clients' make a profit.
Little did they know these loans had been given to people who could not pass a basic credit check, were not even asked to pass a basic credit check, and were not even asked to verify a source of income.
And these sub-prime mortgage companies handed out these sham loans knowing that they were just going to package them and sell them anyway, hands washed.
The corrective Invisible Hand is now crashing down around the globe. And the result will be a depression unless effective stimulus plans are put in place all over the world. We can't simply throw out Reagan phrases like "cut taxes" or "stop meddling" because we live in a very different world today. We can't rely on the platitudes of the parties from administrations past.
The plan needs to be smart, and it needs to have global reach. Cutting taxes for families in the US is not enough. The US and China both struck the "buy domestic" clauses from their stimulus plans, because the problems are global. The problems face all of us. Money needs to be spent all around the world, if we're going to try to out-correct the looming correction. Local anesthesia won't cut it.
"Learn from history, government meddling extended the great depression unnecessarily."
I'm convinced that Ben Bernanke, the world's foremost scholar on the Great Depression, is the most qualified man to head the Fed, and that when he says the stimulus plan should be substantial, he knows what he's talking about.
Hello Peter,
I'm afraid rules were not broken to extend loans to those that couldn't afford them--even illegal aliens with no social security numbers. The federal government pressured banks to ease their credit restrictions. The only rules that were broken were rules of the free market regarding credit, the government forced a distortion in those rules which resulted in the bad loans. Yes, money needs to be spent--not by the federal government, but by everyone that earns a paycheck and who are having less of it taken in taxes. And by the way, that's not a Reagan plattitude, John Kennedy cut taxes before Reagan did. Both tax cuts resulted in long periods of prosperity. But somehow congress managed to spend the extra money and more.
History has shown that Keynesian style stimulus doesn't work. Japan tried several stimulus packages in the 90's--they didn't work, and they haven't recovered.
Bernanke and the Federal Reserve are part of the problem. They are trying to fix this manufactured crisis by printing money. This is only going to result in hyperinflation. The more money they print, the less our money is worth.
This particular "stimulus" package is full of government power grabs like national health care and many, many things that have nothing to do with stimulating the economy. It's an obscenely shameless package of pork the likes of which the world has never seen.
Thanks to everyone for the comments.
Pete, a NYT article from Sept. 1999 entitled "Fannie Mae Eases Credit To Aid Mortgage Lending" The title and date tell you most of what you need to know, the other part is that this easing of credit was at the behest of the Clinton administration. No one can blame this mess solely on Bush, or on corporate greed.
Here's a link to the article:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
The bottom line is that WE ARE IN TROUBLE! It started long before Bush, and spending our children's money & causing super-inflation is not the answer. We had to prove ourselves for a mortgage and so should everyone else. My husband and I have to work our tails off for every dime that comes into our home and so should everyone else. Financial advisors for our country who were in on causing the problem in the first place is a dumb idea. (Although you have to give them credit for creating job security for themselves,... cause a problem and then get paid to manage it, not bad.)
Arguing politics will not help,....but if you time, I'll share my thoughts.... (for the record - I did not/do not like Obama or McCain!)
From where I stand, a little help for the small business man would be a great thing about now. We have been forced to let 4 employees go in the past few months due to the economy and the lack of moral ethics of some multi-millionaire clients. We've done our part to increase unemployment! you're welcome! And if anyone should think that we chose to let them go so that we could have a larger paycheck, you would be dead wrong. Our paycheck has decreased by nearly 100%. yes, you read that right.
Let's boost the economy by PAYING teachers to teach our children the basic rules of life & how to earn an honest living & how to balance a checkbook and by SUPPORTING the parents who are trying to teach the same in addition to moral ethics, and by PAYING our police force so that crime won't pay, and ...I could go on.....
Let's take responsibility for ourselves & our children & our checkbooks and require those in office (political office or the corner office) to do the same.
Let's get over ourselves, stop looking for hand-outs, roll up our sleeves, and get back to work!
It took longer than one president and more than one session of congress to cause the problem. It will take ALOT more than that to correct this ship. Let's not be near-sided in our approach. Let's leave our children with a country that is still the best in the world! I pray we can do it before my family is homeless.
There it is folks, from the keyboard of a business owner.
Elizabeth (my sister) always tells it like it is, pulls no punches and lets her opinion be known. I like that.
Peter: Read it for yourself and see if my claim isn't substantiated.
http://readthestimulus.org/
I think it's strange when the idea of letting people keep more of their money is dismissed as outdated.
Peter, I'm very disappointed with you. You seem to have simply taken the party line and checked your brain at the door.
You wrote: "'Government meddling in the free market' did not create the financial crisis! The greed of the unchecked free market created the financial crisis."
Au contraire, my friend. In the late 1990's the government put pressure on lenders to make more mortgages available for minorities and people with low-incomes.
In the meantime, various government regulations have kept us from exploiting our own oil reserves, building more refineries, and making use of nuclear technologies. So, when oil prices go up, there's nothing we can do about it. Limited financial resources get stretched, rather than go hungry, people decide to skip paying the mortgage, then the lenders foreclose.
THAT'S how we got into this mess.
Then you wrote: "The money is going to be used to keep businesses afloat, and that translates to jobs for moms and dads, who can keep their homes and feed their children."
Is it, really? It's going to be used to pay back loans from other banks, in other countries. And it HAS been used to pay bonuses to executives and companies who are responsible for the mess.
You also wrote: "We can't simply throw out Reagan phrases like 'cut taxes' or 'stop meddling' because we live in a very different world today."
It looks as though you have been completely sucked in to the progressive/liberal/socialist mindset. Please get back to thinking, Peter. These aren't just catch phrases, these are real solutions. Simple economic principles dictate that one can't be prosperous solely by spending money that one doesn't have, and that's exactly what the U.S. government is doing. We have to make use of our current resources, invest wisely and stay out of debt. The world may be different, but economics and human nature are essentially the same.
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