Congress is trying to work out a “stimulus” plan to help revive our troubled current economy. As usual with politicians, they cannot stay focused on the REAL goal and are compelled to treat this as just another opportunity to push their agendas, support pet projects, payback political debts, and generally just spend money. Unlike a real business, little regard is given to really, truly trying to solve the problem in the most expedient, cost-effective way.
The biggest problems I have with the current proposal is the “spending” nature of the plan as well as the fact that it is heavily skewed to expanding government jobs. This is short-sighted thinking. They should be targeting options that can be sustained.
I heard the President say something today about the trouble Congress is having getting a consensus on the plan. He complained that some Senators are calling the “stimulus plan” a “spending plan”. He asked “what do they think spending is? It’s spending!”.
There can be a HUGE difference in the results achieved depending on HOW that spending is done. Fundamentally, it is the distinction between spending and investing… the former generates a one-time return and the latter generates on-going returns. In this case, most of Congress and the President talk about the need to create jobs. In this down economy, there have been a lot of layoffs, so our politicians have talked repetitively about “creating jobs”. Unfortunately, only a very small portion of the stimulus plan has any chance to really accomplish that goal.
First, “job creation” is something that businesses do… not government. If government could solve the problem by just hiring more government employees, why not just hire EVERYONE? We could all work for the government! 100% employment.
The fallacy in this approach is the fact that government is funded by taxpayers. Creating government jobs to stimulate the economy doesn’t do anything but transfer money from taxpayers to the government. Nothing is actually created. Government expenses are a DRAG on the economy! Adding government employees not only drags the economy this year, but every year that spending continues.
And that doesn’t even address the negative impact of union involvement in expanded government employment, but we’ll save that for another discussion.
An aside: I acknowledge that SOME government spending/employment is necessary. A military to defend our country, for example, is a necessary expense. The same with a police force, bridge inspectors, and the like. These require support staff, infrastructure, and management, too. I am NOT an advocate of NO government… just limited government.
Ask yourself this:
What is the difference between these…
- The government spends a trillion dollars of tax money to employ a bunch of people to build ATV trails in national parks (along with a long list of other spending targets),
- or government cuts taxes by a trillion dollars?
Both “cost” the same amount. Would the results be the same?
The first presumes that Congress knows the very best way to “spend” money, that they will choose the most efficient way to get the maximum results from every dollar spent. Well, maybe you have more confidence in the competence of Congress but I do not. In fact, RARELY have I seen them choose to do things the best way.
However, if taxes get cut, it puts all of US in charge of making the decisions. The money we wouldn’t pay in taxes, that trillion dollars, would be spent on something. Each of us would make spending decisions that made the most sense to US… and, in the aggregate, WE would make the very best possible decisions and achieve the optimal realistic results.
Sure, some of us would make silly decisions and spend the money on something frivolous… just like Congress wants to do (but on a far lesser scale!)… but MOST of the people will make rational decisions.
Most of us would use the money in a way that would, on a personal level, have the greatest positive impact on our own well-being… those dollars would seek the most value possible. That’s a good thing. On the whole, the sum of our individual spending decisions are infinitely more informed and targeted than anything Congress could ever dream of.
And, since money doesn’t just sit still, those well-spent dollars would move around our economy generating jobs in areas that have the greatest chance of experiencing SUSTAINED growth. That money would predominately go to the strongest companies and not prop up the weakest, support good products and not bad ones, seek the best services and not the worst. Dollars not spent on business taxes would be used to hire more people and buy more equipment, compounding the value of those dollars and further increasing the return on that total trillion dollars spent.
The problem actually lies with the politicians. Aside from the fact that they created the problem in the first place and, in my opinion, deserve no preference in formulating a solution, they think of this money as THEIRS… not OURS… and that’s simply untrue. Any dollars spent, no matter what method ultimately gets the OK, belong to us. To add insult to injury, the politicians want to use our dollars against us by INCREASING THEIR POWER. Most of the current stimulus plan is designed to further their political position much more than it is to help our economy.
It is yet another disgusting display of political greed in our public servants.