Sunday, August 9, 2009

Stimulus Failure

The stimulus has failed in many ways. It does not stimulate. History tells us it will actually prolong the recession. It is not pro-growth policy but rather job kill policy. It is irresponsible, massive deficit spending and generational theft. It takes revenue away from the private sector and uses it to prop up public sector waste, failure and irresponsible spending.

The fact that only 10% has trickled out and the rest was designed to be spent in 2010 and beyond is a failure in and of itself. It is also a failure of those who wrote the bill.

Because it is government spending, the process of getting the money out is slow and it is subject to fraud and waste with no accountability, which we have already seen. Most of it is wasteful government deficit spending that ramps up in 2010 and will do more harm than good anyway. Even Keynesian's dropped their support for the bill before it was enacted. Most believe spending should be upfront and on infrastructure make-work projects, which are temporary. A Congressional Budget Office (CBO) report on the stimulus bill said that "in the longer run, the legislation would result in a slight decrease in gross domestic product compared with CBO's baseline economic forecast." Government spending does not grow the economy.

The tax credits are too small and the dispersal method makes them unnoticeable. The tax credits also increase your tax liability. They are also temporary and people know this. Real tax cuts would stimulate without being filtered through the bureaucratic waste machine. More bang for the buck. A $400 tax credit cost the taxpayer close to $800 in taxes. It basically amounts to the federal government taking close to $800 from the taxpayer and giving them back $400 which they then tax.

It will increase the deficit by a trillion or more by the time it is all done. Borrowing or raising taxes to pay for the stimulus has a negative job-killing impact on the economy as well, not to mention the inflationary impact of weakening the dollar by printing to pay for spending.

The economy will eventually start to recover despite the prolonging effect of the stimulus. But with the trillion dollar budget plan, the trillions this administration is adding in spending, debt and to the deficit, and if cap & tax, ObamaCare and other destructive bills, many which have built-in trade protectionism, are passed the economy will get worse. Indeed, a malaise that will last for decades. These bills will hurt many people and small businesses which will cause many to make less and lose jobs. They will also cause jobs to be shifted overseas.

The uncertainty caused by the unpredictability of this administration and congress i.e. “how bad will future taxes be and what other harmful bills and regulations will be enacted?” is causing businesses and consumers to not create jobs or spend. This administration’s and congress’ policies will do more harm to the economy than even the recession.

This didn't have to be. America will learn once again what history could have taught them, insane tax rates and spending will slow the economy and kill jobs. The progressive policies of CA, NY, NJ and many others are examples of how to destroy an economy. These examples can teach us what not to do. If everyone would study history with a basic understanding of economics this could be avoided.

The rest of the stimulus should be scrapped and real pro-growth policies like marginal tax-rate and spending cuts, and others should be implemented. Consistent, confidence inspiring policies will enable Americans to keep more income and businesses to create jobs, small business being the usual job creators that fuel the economy out of a recession.

Rather than tax income out of the economy, with the resulting bureaucratic waste, only to redistribute it back in mostly to non-productive public sector areas that do not grow the economy, why not leave it there in the first place? Real tax cuts. People would instantly have more income, business would have more to grow and create jobs. This would actually stimulate, cost less, and have quicker, more permanent results with smaller deficits and debt by trillions. There would be no need to spend money they don’t have on bailouts, cash for clunkers, more entitlements and extending unemployment and welfare. This would mean they don’t have to borrow and print trillions either. Combined with spending cuts, the economy would boom, bringing freedom & prosperity to all Americans.

Most of us know the economically illiterate in this Administration and Congress would never do this. There is only one other option, 2010 - 2012.

Links to Must Read information & resources.
The Pelosi-Obama Stimulus Plan
Historical Economics
Taxes: Election 2008 & Beyond
The Utter Failure of Government ‘Stimulus’ (Update)
Washington & the Jobs Market (Excellent-Must Read!)
Stimulating Failure (Excellent-Must Read!)
More Stimulus Equals More Unemployment (Excellent Read!)
Industry Evidence on the Effects of Government Spending (Must Read!)
The Man Who Predicted the Depression (Excellent-Must Read!)
Phantom Jobs
Stimulus Spending Doesn't Work (Excellent-Must Read!)
Stop The Spending And Cut The Taxes (Excellent-Must Read!)
The Stimulus Didn't Work (Excellent-Must Read!)
The Keynesians Were Wrong Again (Excellent-Must Read!)
Big Government, Big Recession (Excellent!)
What's the Stimulus Have To Do With It?
A Jobs Bottom
The Lessons of the 'Stimulus' Bill
Obama Is Only Digging The Hole Deeper
Let's See What U.S. Economy Can Really Do
A Third Stimulus? Don't Repeat the Same Failures
Stop The Madness That's Killing Jobs
Why the Obama Stimulus Plan Must Fail
Another stimulus will have same result as first
Blue-State Stimulus?
The Stimulus - The Anatomy of a Failure
The Albany-Trenton-Sacramento Disease
Welcome Back, Carter
Not Everyone Guessed Wrong About Stimulus

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