...that President Obama's stimulus plan will accomplish nothing of consequence other than putting the US under the extreme pressures of massive debt.
Armed with nothing more than a good college course in economics 101, common sense, preferably a combination of the two, you will know and understand that the only way to make a sincere dent in the problem would be to immediately lower federal and state income taxes.
With respect to banks that failed and are receiving governmental financial help, one of the most important criteria to receive that help should have been requiring breaking those banks into substantially smaller units.
Although I lean toward your way of thinking I can only hope we are both wrong.
Bill, good post!
The younger generation got Obama elected and now their kids and grandkids will have to pay for it.
From what I've been able to read about his housing plan, it isn't going to work either.
I've been of the mind that we have been offering help to the wrong set of homeowners from the beginning. The latest plan at least might help those who acted responsibly 4 years ago and now are paying the price of the greed on Wall Street. Is it the right answer to our current situation? Who knows but if it can provide relief to families who not only have lost their 20% down payment but perhaps another 100K in value then lets figure out a way to make it work. This is the group of homeowners who then will be able to move forward and maybe even be able to afford to buy an investment property or two.
Unfortunately, Bill, there is no doubt in my mind you have hit it dead on.
As they say, "move along, folks. Nothing to see here."
When you talk about lowering income taxes:
Yes, it does leave more money in the hands of individuals and businesses. But, does that mean it gets pumped back into the economy quickly? Not necessarily. If times are tough (which they are), people are not going to just take that money and spend spend spend / invest invest invest / create jobs create jobs create jobs. They're going to sit on it for a little while, until they see the tide turning (and by then, the tide will have already turned)--it becomes a security blanket / a safety net / an emergency fund. It will probably stagnate for quite a while before it goes back in to grease our economic wheels.
I agree, we need to get things going / keep things moving--we can't afford to have anything grind to a halt. I just don't think you can put it in the hands of consumers who have no confidence / businesses and business owners who have no confidence. We saw what happened with the "no strings attached" gimme to the banking industry: they didn't do anything but sit on their hands, which happened to be holding all that money they just got.
Only time will tell how this all plays out--no one really has the answer, since it's predicting the future. We can speculate all day long, but at the end of the day, I want some action to be taken: and I'm not a person in power to spur any action across the board.
No one likes their taxes, let's face it. But, without them, you probably wouldn't be able to live the life you live in the country in which you live it (at least not as you know--or knew--it).
What is so crazy about the government--our government--making an injection of capital into our down and out economy? It's a loan to get things going: to get people working, to get consumer confidence back up, to recover what we lost (and to dig us out of our artificially deep hole). And how do we pay that off? Yup, taxes. We will be paying this off for quite some time--10 years or so. But, if our economy turns around, and grows, what do you think that's going to do? Tax revenue is probably going up with economic growth, and these loans might be paid back sooner. We all live with debt, it's just a question of whether or not what we are taking on is manageable.
From where I'm standing, I can see that our economy is not healthy. Jobs are scarce. A great deal of people are out of work. Consumer confidence is in the dumps. But, does extra money in your pocket--in the pockets of people (couples), and businesses (LLC's) who make over $250,000 ($125,000 for individuals) going to put a severe dent in that? In the long term, maybe. I'd argue that today fewer and fewer people, and businesses, would be affected by proposed tax increases: there is less money to go around as it is, and where it is going around is definitely out of the hands of the vast majority of people and businesses. So, to say that cutting taxes is going to be the cure doesn't ring all that true. It probably wouldn't hurt--many could use some extra money (just to live, just to get by). But in the way of stimulating the economy, I don't know if you'd see a big result. We've seen what tax cuts have done before--pretty much nil, since the majority of people didn't get much extra money as a result of them (and they never do, since they don't pay the lions share of taxes...the top 1-3 % do).
CR
One big mistake in judgment is deciding that the majority will do what you personally will do. That you see something a particular way is not empirical evidence that others will as well.
I don't use credit cards, for an example. But that has no relationship to whether or not others do or what percentage does.
The biggest problem with Mr. Obama's plan is that there is no exit strategy. If we see that it's not working, there's no way to stop it. You already know that the "gift" to AIG, for an example, didn't begin to solve that problem.
If taxes were cut and/or abated for a period, if then the evaluation was that it was not working, taxes could be returned to their former level and/or no longer continued to be abated. Then a new idea could be formulated and tested.
Bill,
Well said. I think we are in for along ride, and at the end someone will have to pay.
I disagree that there is "no exit strategy." You might not like it, you might think "well that's really far into the future," but it's there. This is not a bottomless pit. Like I've said earlier, the loaned capital is repaid, by the people, via tax revenue. That's pretty simple. It doesn't get paid back over night. But, if the economy grows rapidly--and the people prosper--then it gets repaid more quickly. It's probably a 10-15 year repayment plan, once we come out of recession.
Taxes are always vilified. Yet, they make this country--as it exists, as you all know it--possible. You don't like paying your taxes because you see it as money being taken away from you: surrendered to an inefficient, bloated, do-nothing government. So, those roads you use never get repaved. That public library just never has any books, or librarians to catalogue them. You can't just go to any post office and mail a letter to the other side of the country in 3-4 days for 42 cents. The firemen just never come to put out those house fires. You can't count on the power grid to provide electricity on-demand to power your homes, can you? The police do not protect, serve, or keep the peace. No, our government does not always run perfectly...but here's a news-flash: we are the government. We the people. It's only as good as we are.
Why should we cut taxes across the board? The people who we need to get back into the game account for over 50 % of the country--and likely far far greater a percentage than that: the lowest end of the tax payers to the upper-middle. The people who do not need tax relief happen to be the same people who profited at unprecedented levels over the past 8-10 years: the top 1-5% of taxpayers.
I'm sorry, but, the rich can, and will have to, pay. If you're worried about it, chances are you aren't rich. If you're rich, you probably don't really have to worry about it.
That being said, I don't think we're getting any tax cuts any time soon--at least not any of us at the top: plan accordingly.
The "plan" the people and most of the economists wanted was to put money back into the people's hand quickly so they could resume spending. Anyone disagree so far?
So when you have a plan like that there are three important components: 1) you must get it into the hands of the most people as quickly you can 2) you get it into all of those people's hands contemporaneously, and 3)you make sure you can stop the plan or change directions if it isn't doing number 1 and number 2.
Building a highway in Michigan, if that is one of the components of the plan, doesn't meet the "plan." 1) It and its brother and sister components don't get money into the hands of the most people and it doesn't do it quickly, 2) it doesn't get the money into all people's hands contemporaneoously and 3) should you later realize building the highway in Michigan isn't relieving the economic woes, you can't stop the construction and try something else without spending more money.
An across the board tax cut meets the criteria of the plan. The fear is that it doesn't buy sufficient votes in Michigan, etc., so by political definition, it must be ignored.