Saturday, January 19, 2008

Bush Stimulus Package not even a band-aide


It sounds great. Give money to millions of Americans in the form of rebates or (snicker) food stamps. If I get money, I wouldn't be surprised if it came in the form of monopoly money. If we were to pattern that classic game after the US economy, it would have to come with a color printer so that the banker could just keep printing money. Each property and card would have to have digital displays to show the ever increasing prices as inflation goes up.

So the problem with the economy is that there isn't enough spending going on. So we pump in 145 billion dollars to get it going. But what about next year, or 2010 when Bush's tax cuts from 2001 expire. Don't get me wrong. I appreciate his approach, to a degree. It is much better for the people to choose how the money should be used than the government spending it on pork belly programs (though those are sure to be included). The problem here is that the people that will get to spend it are the people that aren't putting tax money into the system. If it is tax relief, you have to pay taxes to be relieved, otherwise it is just a hand out.

And the program is very short-sighted. This problem will be here until it is really solved. Our long term problems are Jobs, credit, and cost of energy. Here is how we solve these issues, and it is very doable:

Eliminate minimum wage. Allow the market to determine a wage. Illegals take many of the jobs that jobless Americans can do because of this. Illegals will not be needed anymore and we will have higher employment, meaning more money is put into the economy, meaning more taxes go into the treasury, meaning fewer people will need government aide, meaning taxes can be lowered further, meaning more money goes into the economy, meaning we have come full circle. And this keeps going on and on. This will also help inflation in that wages across the board will not have to be inflated to compensate for the minimum. I wonder how much the large increase in minimum wage is contributing to our current situation.

Eliminate Capital Gains and Inheritance Taxes. You want to make it beneficial to make money, make good investments and be able to pass it on to your children without the penalty these taxes represent. All of this money will be pumped into the economy, increasing jobs and consumerism.

Get rid of Ethanol. This is the most bogus thing we've got going right now. There are no market forces at work when it comes to this formulation of gas. It is fully subsidized by the government. It costs more to make than it is sold for. Plus the effect it has had on agricultural products is tremendous. Farmers are switching to subsidized corn. This decreases the supply available for feed for cattle which causes the price of beef and milk to increase. People must then spend more for staple food products, outstripping any benefit to our carbon footprint.

These are just 3 points. The list goes on and on, but it is a start.

1 comment:

zackzilla said...

I posted something similar to this on my blog, although it was an article from the Heritage Foundation.

I also debated with a co-worker about the people who don't pay taxes getting a tax rebate. I compare this to the "jammer" effect.