Posted by
John Andrea on Monday, February 09, 2009 8:24:42 PM
We've got a stimulus package on the way, so maybe we should understand what "stimulus" is. When we hear about the stimulus package, we hear words and phrases like "jolting the economy", "kick-starting the economy" or "shocking the economy back to life". And so for a visual of what a "stimulus" would be, imagine a doctor with a defib on someone whose heart has stopped, shocking him back to life. And if that is the idea of what this stimulus package is supposed to do...it will do nothing of the sort.
Let's just pick a number, say four million. I think that number is pretty close to the number of jobs that the stimulus package is estimated to create. And let's pick a day of say, 01 June of this year. If on 01 June of this year, four million new jobs began, that might be a stimulus or a shock of sorts to jolt the economy. But under the stimulus package, four million jobs would not be created on 01 June.
The supposed four million jobs are going to be staggered over several years. And not only are they going to be staggered, they are also going to be temporary jobs - projects and the like. So let's pick a number again and say that 250,000 new jobs will be created in the first year. How would 250,000 new jobs spread-out over the country, shock our economy? It wouldn't. And not only would the 250,000 new jobs not shock our economy, I would predict that in the upcoming year far more than 250,000 jobs will be lost. So how could we possibly shock our economy into recovery, when in fact we would be losing more jobs than what the so-called "stimulus package" is creating?
And in the next year after that the stimulus package might add several hundred thousand more and so on the following years. But by the time the jobs from the stimulus package got created in the out-years, many of the ones created early on would be finished. Remember, most of these jobs in the package are projects...not long-standing business opportunities. And as convoluted as it may sound, by the time we were to make it into the third and fourth years of this package, more stimulus jobs would be LOST...than will be created!
Staggering the job creation over an extended period of time, is like the doctor administering small amounts of shock to a heart attack victim...througout the day. Both the economy and the patient is going to die, despite the efforts to revive them.
But hang on...we still haven't gotten to the worst part.
If you are a business person today...what are you thinking? You've got to be thinking that this huge spending deficit we're amassing is going to have to be paid for. And you are probably thinking that you are going to be taxed into oblivion here in the next couple of years and many more beyond that. So what do you do now? Well, if you are a smart business man, you are probably going realize that you need to make as much money as you can NOW...before the heavy taxation hits. And so you start restructuring and downsizing. And downsizing generally means: layoffs. You start laying-off employees and restructuring your workforce to maximize your profits. And when businesses are doing this all over the country, unemployment will, as some are fond of saying: skyrocket. And our states are really in a great position to handle that, right? Of course, I believe this is already happening and I believe it started late last summer when Obama; leading in the polls, announced that he was going to confiscate the wealth of anyone making over $250,000.00. But that is for another discussion.
The way to turn this economy around, is to put something forth that will give businesses some confidence. And what better way for businesses to have confidence, than to put TAX CUTS into law! Now is the time not only for tax cuts, but for SIGNIFICANT tax cuts. Make these tax cuts guaranteed for the next several years out, make them guaranteed by writing them into law and our economy will recover. It will recover because businesses will now have confidence in their future. This will make all the difference in the world. The reason it will, is because business is not just crunching a bunch of numbers, figuring-in a gain here, a loss there, etc. Business, like most things, is about 90% human nature. And it is the human nature aspect of this that will determine what the final numbers will be...not the other way around. Think of it this way. When the economy is on a heavy decline, what does the average American worker do? The average worker spends less, holds on to what he has because he is uncertain about the future and in particular...the future of his own job. And so the American workers will recoil and spend far less. Well, the business community will do the same thing, they will recoil as well. They will try and hold on to more of their money and will contract rather than expanding. And with both the American workers and the business community both contracting, they're locked in a stalemate, the economy continues to spiral downward and more jobs are lost, which means spending decreases even more, causing more jobs to be lost, causing a further decrease in spending, causing more job loss...on and on it goes.
So we should be able to withstand all of this, right? I mean, we have had hard times in the past, recessions and such and so we should be able to recover from this. But as Lee Corso is fond of saying on ESPN's College Gameday: "Not so fast my friend!". In the past, we have never had such a huge expenditure of "printed money" being dumped on us. This spending of money that we do not have, will eventually cause inflation to kick-in. When the inflation kicks-in, the money we do have will of course have less buying power. For those unfamiliar with inflation, it's simply this: What you could buy in the past for $500.00, may now cost you, say, for example: $575.00. So your money is not going to go as far. Then we bring in the taxes as I mentioned earlier. An upcoming confiscatory tax-rate is not a possibility, but rather an inevitability. We're going to have a tremendously huge deficit that will have to be paid. Who is going to have to pay this, will it be the poor, the unemployed or the lower-middle class? No, the taxes will be paid by the upper and middle class. Forget about this nonsense of no one making less than $250,000.00 will have their taxes raised, that was simply campaign rhetoric for votes. The upper and middle classes will have their taxes raised significantly. And just as an aside...don't forget about "Universal Health Care" that is right around the corner.
Let's now frame this picture so that we can take a glance into the future. Just down the road we're going to have high unemployment, high inflation and high taxes. Now, who in their right mind today, is going to want to run out there and start a business? Who in their right mind today; who is in business already, is going to be thinking about expanding their business? Well, no one...in their right mind! Hell, with that gloomy picture, making money is not even going to be in the equation...holding on to what you have and trying to survive all of this will be the challenge. And so where is the job creation going to come from...ACORN, makers of hybrid golf carts, folks filling potholes, painting schools, building a Frisbee course or tending to one-eyed tadpoles on a fish farm?
This so-called "stimulus package" is worse than anything a bunch of children could come up with. In fact and in all sincerity, we'd be far better off taking our economic problems to the nearest elementary school for a solution. And I mean that!
Forget about comparing what might happen to the Great Depression...this thing could wipe us out entirely! The Grapes of Wrath might look comfortable from where we'll be sitting if this thing passes.