Proposed economic stimulus package
Posted Jan 27, 2008 @ 10:19 am, Viewed by 292 Visitors, Read 304 Times.Proposed economic stimulus package -Opinion-
How can redistributing income from those who earned it to those who didn't "stimulate" any economy?
If it could, we'd already have the most "stimulated" economy on earth because, over the last four decades, we've already redistributed at least $9 trillion from those who earned it to those who didn't.
If the $9 trillion redistribution had worked, the domestic economy would need no "stimulation".
And, if the $9 trillion redistribution didn't work, how's another temporary $150 billion redistribution going to work any better?
Indeed, the $9 trillion redistribution has de-stimulated the domestic economy, and another $150 redistribution will further de-stimulate the domestic economy.
One can't replace production with consumption and expect to do anything but destroy both.
One can't tax responsibility and subsidize irresponsibility without causing less responsibility and greater irresponsibility.
The real and simple economic truth is there is no free lunch.
And just whose economy are we supposed to be "stimulating" here anyway?
How does giving $1,800 of my tax payments to an individual with four children who produces nothing (and, consequently, pays no taxes) stimulate our "economy"?
Those individuals will spend the $145 billion at WalMart, and the economy they will actually stimulate is the Chinese economy.
And then an actually stimulated Chinese economy will invest another $145 billion of its increased U.S. currency reserves in buying the $145 billion of bonds the U.S. Treasury will have to issue to replace the $145 billion which the "domestic economic stimulus package" withdrew from the current-year U.S. budget.
So, all we're actually doing is:
(2) Giving the $145 billion to U.S. consumers who didn't earn it and (by virtue of paying no U.S. taxes) will never have to repay the Chinese debt;
(3) Taking the $145 billion from U.S. producers who earned it and (by virtue of paying all U.S. taxes) will always have to repay the Chinese debt; and
(4) Thereby depriving the U.S. economy of both the capital and incentive without which its economy can't properly function.
Now, that's one heck of a "domestic economic stimulus package".
Actually it's not a "domestic economic stimulus package" at all.
Instead, it's nothing more than our political aristocracy's election-year pandering to the redistributionist voters whose unearned consumption year by year decreases both the capital available to invest in the U.S. economy and the incentives to invest it.
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Overall, one third of dollars spent on manufactured items in this country now are spent on imported goods. Targeting the folks that are the primary shoppers at Wal Mart will increase this ratio. And it will benefit the Chinese and other countries importing to us. The concessions to business are simply more meddling with the process of making good investment decisions by using the tax code. I wish one candidate would point this out and recommend spending cuts (drastic ones), elimination of corporate tax (which is ultimately passed along to us anyway) and institution of a fair tax on consumption instead of the byzantine tax system we have now.
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I agree. It is both political and psychological gamesmanship. It might have a psychological effect, boosting consumer confidence that Big Brother is going take care of things, but it is economically unsound.