Scenes From a Stimulus Battle, Part 4

We are going down the same road here in Canada. Not as much ($184B over 3 or 4 years), but, were not as big. Its demoralizing actually, most of the stimulus aimed at"shovel" projects - infrastructure as a means of stemming price deflation further.

The problem, as i see it, with any kind of government spending (during good times or bad.....don't matta) is that government cannot create wealth as it must coercively take from one group of people to be able to spend anything on another group. In other words, since government cannot produce anything of value as its actions are absent any market exchange, it is a net consumer of value, and must therfore, take from productive areas of the economy the resources it needs to provide the "stimulus" to unproductive areas of the economy.

Its a beautiful thing actually, because we see those that benefit from the redistribution, but, we never see those that lose. That is because the burden is spread out across the entire tax base in the form of increased marginal taxes, or, increased debt. People will therefore perceive overall the illusion of a wealth effect. Putting it another way, its not that people think the government can spend their money better than they can. Rather its that the majority of people believe that the government can spend OTHER peoples money ON THEM better than they can. Its how socialism is able to persist in the context of what most think or believe is a "free" society.

I watch and hear whats going on in your country and I am saddened knowing that the last outpost of free and unfettered exchange of resources is quietly disappearing. The power house of economic liberty is dying a slow death and most don't even know it.

Those that want the stimulus fear the reckoning of irresponsible government and wreckless FED policy. They want to keep drinking the coolaid at a party they don't ever want to end because they know that the hangover is going to be brutal.

Those that understand the true economic connections between government actions and the people it supposedly represents know that we must and inevitably will (as history has shown) go through the correction, this period of redemption, before things get any better.

During those trying times, I wish you all the best.

The problem with the Republicans policies have not been the tax-cuts. The problem is that government spends too much. You can't cut taxes and not cut spending. Bush cut taxes but doubled spending. that leaves us with even more debt. Anyone with brain realizes that you can't dig your way out of a hole. You can't spend your way out of debt. We will eventually have to pay up. There is no way for us to fix this recession. The market is correcting itself. The Federal reserve has been lowering interest rates by injecting the systems with fiat money since it was created. The bubble has finally collapsed. We know must let the market correct itself. Stimulus bills will only blow air into the bubble. This won't fix the problem. That is like blowing air into a balloon that has already popped. The stimulus bill will only hurt the economy and pro-long the recession.

We are mortgaging our children and there children and there children's children.

Our politicians spend too much money. We are in massive debt.

uh: We got into this situation when people bought things they couldn't actually afford. That's what caused the bubble. Now folks are arguing the solution is to get people buying things they can't afford again. You're trying to "re-inflate" the bubble, which is lunacy.

The bubble is artificial prosperity. It's an illusion. It's created by the Fed mismanaging interest rates and making it cheap for banks to over-lend. People in houses/cars/clothes for which they can't truly afford to pay is not the foundation for a stable economy. And when these people default on their loans, it hits all of us to some extent. That's what's going on right now.

But when our government eventually defaults on its debts, from its overspending, EVERYONE WILL PAY A HUGE PRICE. You think this is bad? You think the Great Depression was bad? Wait til China stops buying our debt and demands to be repaid.

The real solution is to SUCK IT UP. Cut spending and live within our means for once. For a few years, times would be tough. There is simply no way to avoid some unpleasantness. But if we try to spend our way out of this, it will last a decade. Historical examples from around the world prove this to be the case.

And by the way, this isn't a Republican or Democrat argument. It's a common sense argument, which is why neither party will endorse it. No one wants to cut spending, and no one wants to address the issue of the Fed.

How can you stimulate a dying market with less spending? The market is in trouble because consumers reduced spending. Will tax cut alone solve the problem? I believe people will save those extra tax returned money instead of spending them. Moreover, if they spend, they will buy Chinese goods instead of American's products because they are cheaper. How will 14 millions Americans who are unemployed right now be benefit from tax cut? How can they pay health insurance for their families? Sorry! I do not buy Republican's solution!

Remember when Cheney said that "Reagan proved deficits don't matter?" Well Bush proved that they actually do. Excessive debt--on the personal, corporate, and governmental levels--got us into this mess. More debt is not going to get us out.

There is no pain-free way to get out of the mess we're in. Tax cuts and spending increases might both help, but only if we do it in a manner that doesn't increase the deficit. One way to do that would be to stop funneling wealth into overseas misadventures and start investing in our nation's infrastructure.

To those people who suggested tariffs--they can't possibly help. Tariffs would be met with retaliatory tariffs, killing our exporters and driving up the cost of living. They tried tariffs in the Great Depression (Smoot-Hawley tariff) and it crashed the economy.

We need to let housing prices fall to sustainable levels. We need to let insolvent institutions go bankrupt so that they can be rebuilt in a way that makes economic sense. We need *lower* tariffs to reduce the cost of living and help our exporters. We need to stop running a trillion dollar overseas empire. It's what brought the Soviets down, and now we're following right behind them.

If this kind of spending would actually work now, it would work ALL THE TIME. Economic laws do not change based on the condition of the economy.

However, if an economy flourishes during good times with little government intervention, as Mr. Obama has admitted, then an economy corrects itself faster during a downturn with little government intervention. And indeed, recent studies (check UCLA) have concluded the Great Depression was prolonged by years due to government trying to "fix" things.

Even Henry Morgenthau, the Treasury Secretary under FDR, determined this to be the case. He testified to Congress: "We are spending more money than we have ever spent before, and it does not work. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt, to boot."

This is a rather obvious fact to anyone with common sense. We got into this mess by becoming overextended financially. We will not get out of the mess by repeating the process.

And Rep. Bartlett had it exactly right: We are burdening our children and grandchildren with our selfishness. We don't want to swallow the bad-tasting medicine, admit our mistakes, and do what's right. We want a "quick fix" (even though there's no such thing in economics or government action) so we don't have to assume responsibility. And we want to pay for the "quick fix" by shifting the financial obligations to later generations.

It is reckless and immoral.

Spend less, tax less.

@Stefanie: I'd suggest spending less money, not moving into houses you can't afford, and making more money with your business. That's the best path to personal wealth and financial security. Stop looking to the government for handouts.

The reason this will only hurt the economy is because the government doesn't produce anything. You need to produce a good in order to exchange it for another good. The government can only take money from those that are producing in order to fund it's operations. All they are doing is transfering where the money gets spent, rather than actually creating any wealth or jobs. Any spending is at the expense of someone else. Or they can borrow the money at interest from another country and create another artificial boom, but one day the bills will come due. The scary thing is that our government is not smart enough to know where to properly invest the money since the market is made up of billions of people's emotions, so this spending is most likely to be malinvested.

Injecting $800 billion into the economy won't save anything for me, an average lower class citizen.

Why can't we start by CUTTING SPENDING?

It sure seems like if we spent LESS money, we'd be better off.

What does an average lower class american citizen know anyway?

OK -I have two major issues here that I see most consumers are having and I want to know what the White House is going to do about it!

1. MORTGAGES
I have a mortgage (4 years now - 30yr fixed) and have requested a modification from National City - turned in all required paperwor - of course I never got any answers. I have had a pay reduction of 20% at work, hours reduced, benefits cut/reduced. I cannot get child support to save my life and I have a new medical issue that started this year - of all years! I pay my mortgage each month - I am only asking for a modification - no bailout - nothing free, just some help! It seems no one can get any help out there! I am not normally a blogger, but I have been forced to review them and I am finding that everyone is having problems getting the help we were promised.

2. CREDIT CRUNCH ISSUES
I received 5 notices from Chase lowering credit. Accounts had perfect payment history.

Personal & business accounts:
$15k bus. reduced to $9k; $10k bus. reduced to $6k; $4k pers. reduced to $2,500; $500 pers. closed – owed $0; $8k pers. reduced to $2,500. This effects me personally and in my business!

Letters stated the same thing: "balance is too close to credit limit".

Credit limits reduced to within a $200 of balance. Destroys credit score- brings balance to credit ratio all the way up & my FICO is affected by something I didn’t do - punished for on-time payments. What happened to credit LIMIT? Why give a credit limit of X, if you can only use Y?

I have also had limits reduced by AMEX, one of my business cards went from $36k to $6 - right above the balance, yet again!

This practice is destroying people's credit! I pay ontime and my FICO is shot!

How are we supposed to survive and maintain our small businesses - what happened to this plan?????

i think obama's confidence on his stimulus bill is a great thing. to succeed, one has to believe.

" The money designated for the Mall was about 20 million tops for mostly repairs and upkeep, including lawn maintenance. "

Oops- It was 200 million, not 20. Too bad it became a concession to get rid of with the GOP.

Their stupid stimulus plan that won't work. It's easy...stop spending, and big big tax breaks and incentives to build, start businesses and to expand. Starting a new WPA isn't going to create real jobs, it will just keep the incompetents off the streets until the defective bridge is done being built. I say incompetents because the idiot Robert Reich said, skilled labor and white construction workers need not apply

I fail to see the problems getting solved with anything coming from Washington D.C. we have little textile industry in this country. That hole has been filled by construction across the nation but the morgage crunch stopped that. We need to raise tariffs on imported goods and reduce the cost of living for the average family Or reduce there monthly morgage so maybe they can afford to work at a lower paying job and keep there homes. Give us goverment loans of 40 years with low interest instead of a stimulus pack. If all the money to bail out the banks and this current stimulus pack was put toward that 1.5 trillion dollars could have bought alot of troubled loans from the banks to a goverment loan and the banks could have stabalized themselves

Why do the republicans continue to demand more tax cuts when its been proven beyond a shadow of a doubt they do not work. We've been cutting taxes and "getting gov't off our backs" for over 25 years and the end result has been a economic disaster of historic proportions. The gov't is not our enemy, bad leadership in gov't like the republicans have provided this country, is the enemy. Mr President stop wasting your time trying to work with these losers, let them sit on the side of the road and whine, after all truth be told they want you to fail.

I think the banks should get more stimulus for office renovations and jet planes. I was in WAL MART today, looking for a fifteen hundred dollar vaste basket, and a six thousand dollar shower curtain. But I cant find one in Wal Mart.

Im a little confused how is the tax cuts gonna work? The way im reading this its a payroll tax cut not a tax rebate check. So that means ill get approx $10 more per week on my check if its $500 per person over a year. Wow that will sure get the economy rolling fast....lol what a joke. If that is the way it is going to work Our president is more of an idiot than bush was with the $600 stimulus. $10 extra bucks in the peoples pocket is not going to make people feel safe to go out and spend again.

So after rushing to enter a war that has cost us a trillion dollars and rushing to give trillions of dollars to the banks that did nothing, we are now going to rush to borrow another trillion dollars to spend at a time when this year's entire GDP is already owed to a private bank and foreign countries.

We are not going to fix this problem by borrowing more money. Debt has to be eliminated before we get better. What we are going to do is sell our freedom for that $300 check you're going to get in the mail.

Sounds to me that they had some good discussions and varying opinions are healthy if they are genuine in their concerns. All of us should be concerned at the magnitude of the money and why banks are getting so much of the money while turning people out of their homes. Consumers make up 70 percent of the economy so it is rational for me think that more money should be directed to tax payers and businesses versus pet projects. States and local governments should look after their own roads and schools, using tax money that they collect locally to fund the projects. I trust my neighbors (or most of them) to spend their money wisely and prudently, I don't trust politicians to spend it for me.