Posted by
Steve on Friday, January 09, 2009 8:32:28 AM
The Democrats and Barack Obama are hot to trot to do their something to “fix” the mess that is the economy. They are drafting a (currently) $745-800 Billion bailout. There are rumors that earmarks will put that total way over the $1 trillion mark. Barack Obama says that there will not be any earmarks. But, you have to remember that he works with Democrats. They live by the earmark. There will be earmarks, or most of the congressional Democrats will have heart attacks.
The best thing that could happen to Barack Obama is that the Republicans filibuster this bill for a while. That would give the economy to recover on its own and show that this stimulus is not needed. What the economy does not need is a massive infusion of money from the federal government. That is one of the reasons that the recession of 1929 became the depression of 1930-1939. The stimulus we already put into the system may have prolonged it too much. Most recessions last between 16 and 21 months. Taking the shorter time, the economy should be coming out of recession by the end of 2009. Taking the longer time, the economy should be coming out of recession by the beginning of 2010.
A stimulus plan will have lots of spending on government projects. These government projects are supposed to be “shovel” ready. That does not mean that they have been through all the court proceedings that the environmental groups will put them through. If we pass the stimulus bill in February, most of the construction projects will not actually be constructed for 3-5 years. That is way past the time when they would have been necessary to curb the recession and inflation will have increased the cost way over what was set for the project. That will mean that the construction parts of the stimulus will have little impact on whether we come out of recession or not.
Last year, Congress gave each family a stimulus check. The stimulus check did not do what the government intended it to do. They intended that people would purchase things with the check. People saved money or paid down debt with the check, they did not go on the spending spree that Congress intended. If this stimulus plan includes giving people a one-time check, you can count on the same thing happening. If you want people to spend money, you have to give them notice that the money will be there in the future. Give them a tax break that is permanent and people will spend that money because they will know it will be there in the future.
One thing Obama is talking about is decreasing taxes for people who do not pay taxes. That is impossible, even for Barack Obama. He can increase their welfare checks, but he cannot lower their taxes. We should call this what it really is: a welfare check for those who do not pay taxes. One thing it is not is a tax break. We have to get away from letting Democrats redefine the English language every time they want. Some Democrats are calling the FICA (Federal Insurance Contribution Act) payments a “tax”. They are not a tax; they are a contribution to their social security.
There is no real reason to pass this stimulus package except that Congress and Obama will be able to say they did “something” to fix the economy. Then, when the economy finally recovers, they can claim to have shortened the time frame. If they shorten the time frame from the 16-21 month window, then I will believe them. If the time frame goes beyond the 16-21 month window, then they are not telling the truth. Telling the truth will not matter, the public will believe them no matter what they say. People need to become more informed about what is happening. Then, politicians from both parties will not be able to pull the wool over their eyes so much. It will not stop all people from being fooled, but it should stop enough that politicians will have to watch what they say and do.