January 28, 2008 Back To Archives Return To Home Go To Comments
Stimulus Package
After five years of growth in the economy, it appears as if we are headed towards a slowdown, helped along by a slowing housing market due to the sub-prime lending crisis. The signs were starting to appear about a year ago, but the ever hopeful elites who run things refused to see the writing on the wall. The ups and downs of the stock market, which at times fluctuated wildly, were simply looked at as opportunities to make more money for investors. Somehow, it never occurs to any of these folks that perhaps things are a little out of whack.
The proposed plan is to give every taxpayer a $600 check, and if you were lucky enough to not pay any taxes last year, you will still get a check, but only for $300. For married persons who filed joint returns, the amount doubles. The purpose of this "rebate", which is a one time event, is to stimulate the economy by giving the consumers instant money to spend. The total amount to be passed out is in the range of $160 billion, with approximately a third of that aimed at small businesses via a speeded up capital depreciation feature. The idea is that businesses will spend more money on expanding and updating facilities, thereby adding to the boost to the economy.
One of the main faults of this plan is that there is no guarantee that we consumers will spend the money on new stuff. Many Americans these days are feeling the pinch, and many of us have let our credit card balances get a little too high. So there is the question of whether we will use this bonus to pay down debt rather than going on a spending spree, in which case the intended stimulus will not be as effective as hoped for. The elites in the financial world worry about this happening, but our government believes that we are just like them, i.e., we will spend, spend, spend.
A second doubt in this scheme is how quickly businesses will move to expand. If they go slowly, it will take longer to feel the effects. Given the nature of depreciation schedules, this part may not be all that helpful either.
You might be asking yourself at this point where the government is going to get the money it will be giving us. If you asked that question, it is because you are smarter than the politicians in Washington. You have probably figured out that if the federal government is already running a deficit, then they do not have any money (which they must first get from us in any case). You are right of course, and what the elites are going to do is borrow it.
Imagine that you ran your personal finances in this manner. You are already not able to pay your bills, so instead of cutting back on your spending, you simply go out and borrow more. Sooner or later you are going to come up against a wall that will not allow you to keep borrowing, and you would be putting at serious risk your entire financial condition and the security of your family. To the elites who run our government however, that idea doesn't even enter into their thinking.
The reason they feel they can keep on borrowing is their hope that the global economy is going to keep growing, and that eventually there will be enough revenue flowing to the government to meet the debt payments and balance the budget. This wishful thinking extends to every financial aspect of the United States federal government. In the long run, somehow there will be enough money to not only make payments on the debt, but to also pay for the massive entitlements programs that are about to go through the roof due to the boomer generation retiring.
This entire house of cards will not stand much longer. The wild gyrations of the stock market indicate an underpinning of insecurity. The mortgage crisis and the phony pumped up home values that we saw in the past 10 years did not add real wealth to individuals. What it did do is allow speculators to make more money and the federal government to hide its poor economic status. Increasing prices for oil are stemming from the growing need of industrializing nations, mainly China and India, but others as well, that are putting extensive strains on the global markets. Meanwhile, the value of the U.S. dollar has declined as the world readjusts to the new realities.
The United States however, is not making adjustments because it has now gone too far down the road of fiscal irresponsibility. An abrupt halt to out of control spending could possibly send the entire world into a huge recession, and if that happened, our elite politicians might find themselves out of a job. Instead, we are being offered a bribe to keep us spending, and almost every candidate for President has signed on to this fallacious reasoning. What the elites are doing is hoping for a miracle turn around without doing the hard part, which is reining in spending. Most of the Presidential candidates are promising even more and bigger entitlements and programs, all supposedly to be paid for out of President Bush's "tax cuts for the rich". There seems to be no end to what our politicans will do because these new programs are simply further bribes to keep us voting for them.
It is time we recognize the scam being pulled on us. We are being bought with pork barrel spending and entitlements, all paid for with future revenues not yet collected. In effect, we are allowing the elites to squander the nation's resources and mortgage the future we are passing on to our children and grandchildren when what we should be doing is reducing spending, reforming the tax code, and working to reach a balanced budget! Those are the first and most important steps in rebuilding America's financial power. (for more on these items, go to taxes or economics)
It is time to cut spending across the board. We need to review every federal and state program with an eye towards eliminating the wasteful and severely pruning those we deem necessary. Immediate action is needed to salvage the Social Security Trust Fund. Medicare needs to be restructured and brought into an overall plan for meeting the health care challenges ahead (for more on the health care situation go here).
It is time for us to choose our leaders because they have the character necessary to manage this great nation so as to keep alive the birthright of freedom that we were given over 200 years ago. We must be willing to look at ourselves and see that we are in part responsible for the state of the nation. We have sought for the government to do for us many things we should do for ourselves, and the elites have responded. They have increased the size of government beyond any reasonable size and in the process accrued to themselves ever more power. In the end, they have been corrupted by that power and have corrupted the people by making us more and more dependent. Meanwhile, in the midst of all the confusion, many of our rights and liberties are being eroded. When we give up the responsibility of taking care of ourselves and instead give over authority to the government, the freedoms enjoyed by all of us will diminish until our nation no longer looks like the bastion of freedom which it was at its birth.
The current financial crisis will not simply go away. It will not be solved by handing out checks issued by borrowing the money. The long term issues of entitlements and health care will not be resolved by increasing taxes. Our nation must begin a new course, one based upon sound financial principles. Continued borrowing to prop up an unstable economy that needs major reform is stealing the inheritance that we should be giving to future generations of Americans. It must be stopped, it must be reversed, there is no other responsible course to take! In order to make it happen, we must reject the false ideologies of the elites and in this coming election, deny them the Presidency! |
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