I've had some time to digest all this talk about this economic stimulus package being proposed by literally everyone looking for a vote in 2008. I waited to see what differences there are in the President's and Congress' packages. Honestly, i can't believe the amount of money Congress is willing to waste to try and pick things up.
From what the Bush Administration is saying, they feel a good amount to kick back would be about 1% of the GDP - 1% !! What this is essentially saying is that the Federal Government has almost NO IMPACT on the economy, but they are willing to bankrupt our government for another 1% - which is about $150 Billion...... The lack of thought that Congress and the administration sees that B in billion is mind boggling.
The specifics of the plan are to give single taxpayers a check for $800, and for married couples to get $1600. Anyone singles making over $60k and couples over $110k get nothing. Of course, I qualify. The govenment is expecting me to be a good American, take this cash and waste it on groceries, maybe buy some CD's or perhaps a house to keep the crappy housing market afloat. Ironically, i got a bill from the IRS for $800 about a month ago, so that is where the cash is going - straight back to them. So, for me, the stimulus is a wash. But, is this really and effective way to fix the economy. Uh, nope.....
Time to show off my limited knowledge of economics. Let's discuss Fiscal Vs. Monetary Policy. For those of you from Abbeville, we're talking about budget vs banking..... Congress and apparently the Bush Administration feel that the government is the best way to get cash in the hands of it citizens, but the effect that fiscal policy has on the lives of people is miniscule. The market is hundreds of times larger than the size of govenment - at least for now.
To think that it can turn around an economy the size of the United States is insane!! However, the effect it has on out National Debt and budget deficit is crippling. Worse yet, it gives every social program the feeling that we have hundreds of billions of dollars to waste on anything. If we can blow $150 throwing out checks to anyone, why not another $100 billion on Welfare, $20 Billion to assist people with their heating bills in New England, and $50 billion for socialized medicine. Where does it end?
If you want to have a real effect on the economy, the best way to do it is by monetary policy. Voters mortgages, credit card bills, and car payments are all tied to interest rates. By dropping these, it makes it easier for people to pay for these things, and it allows businesses to free up cash, expand and - here's the nice part - HIRE PEOPLE. And the effect on the budget? Zero. Of course, it's not a very sexy way to do it. It is an election year, and those guys and gals in DC need to get voted back in again. God forbid they have to get a real job!! So, given the hard way and the easy way, Congress will do it the easy way, bankrupt our country a little (or alot ) more, and worry about it after they're dead.
Yes, the economy is slowing down some. It's been a lot worse, but it could be better. Don't I know it !! However, as an unemployed guy sitting at home who could surely use $800 out of nowhere, I realize that somewhere along the line, I'll be paying for that $800 - and then some. I would much rather just get a job, pay my debts off at my leisure, and not depend on my government to do it for me at the expense of my future......
.
4 comments:
my mothers maid told me when she wins the lotto she wants to put the money in my name then i can split it with her without the government knowing where she can still get her other federal check. of course i agreed. this is just about as stupid as what this proposal is. hope mattie wins.
Mike, given your education as an economist, would you digress as to how much the hollow increases in the minimum wage drive inflation up without any real increase in productivity? Also, how much are our retirement accounts injured by that inflation?
I would say that the wage increase would do either or both of two things: costs go up, so prices will increase to offset that increase in labor costs. Or, management will lay off a number of low wage earners to cut costs, therefore reducing some people's wages to zero - OOPS!
The second question is better answered by a financial advisor, but I'd say higher wages lead to lower profits, and thus, lower stock prices and dividends. That kills most retirement accounts, which are mostly stocks and mutual funds. Am I right?
Mike, I'm looking at the basic worth of the principle, whether in a savings account or a stock. As the dollar's worth drops, the retiree's portfolio becomes worth less and worth less until, in buying power it is worthless.
Simple model on the first, the employee making 10 widgets an hour imparts no more value to those widgets at $X.00 per hour than the does at $X+n.00 per hour. The cost of his unfunded mandate driven wage hike goes into the cost of the widget, and if you use the widget as a relative indicator of the dollar, the dollar's value is less.
Tangent, if you forced the largesse of a minimum wage increase thorugh congress, you're responsible or to blame for the current recession, period and have no place SenatorS, begging for my vote, particularly if you're pointing your Rino or obdurate Donkey finger at Bush braying foul!
And that goes double for John McCain.
Post a Comment