Dear 22%, from the 59% —
With public approval of the stimulus plan waning (I am taking credit for at least 3% of that 12% drop), it is becoming clear why. Americans actually have a general idea of what works and what doesn’t. Tax cuts work — they worked for Bush, Bush, Reagan, Kennedy — to name a few. It took something radically out of each one’s control before their economy started going down (for example, the most recent Bush made more revenue by making it more cost effective to just pay the damn taxes instead of hire good lawyers to legally avoid them. Remember folks: tax avoidance is legal and awesome, tax evasion is illegal and bad. Unless you’re the Secretary of the Treasury.)
Increased government spending doesn’t work, unless it is very well tempered and spurred on by, say, a World War. World Wars are, by the way, not part of the economic stimulus plan. We even axed the trade war aspects of it.
Because we have to remember what the point of the stimulus is. The point is to get money out to the people and businesses quick enough to grow jobs. The argument is that if the government can just inject 800 (sorry, 900 billion) into the economy fast enough, it can pump enough in to not sink the ship. They figure they just have to take enough from somewhere to put it into the economy (and various non-economy initiatives that are in the bill) to make the economy work. The current line is every $1.00 of spending will net back $1.50 or so in revenue for the economy, or GDP, or whatever measurement they are using after the CBO shoots down their last one.
I understand that you have to spend money to make money sometimes. But, want me to tell you something? You spend that money on useful things. Not unuseful things. If I were a business and I needed to have more jobs, I wouldn’t sink money into half the things they want to sink money into. Because they won’t grow jobs — and at the cost of 200+k per job made, you have to wonder how much of that is going to overhead if we’re talking construction jobs. I don’t know too many construction workers, but I bet Bob the Builder is not raking in around 200k a year.
But here’s a difference with government. It is not going to spend its money — it is either going to take more money from us, or borrow it from other countries. Neither is a good option to trying to grow the economy. The more money they take from businesses and you and me, the uh, less money businesses and you and me have to do things. In businesses case, pay you and me — in our cases, to buy the sorts of things that the government wants to spend money on — condoms, the arts, food, so on and so forth. None of these are unworthy causes that shouldn’t be having money spent on them. But you know what’s more stimulative for an economy?
Not taking 900$ billion out of it. Because then, you don’t have to decide where it goes. That leads us to the government’s next option. Borrowing the money.
This is also to easy to see why it won’t work. You wake up tomorrow and you say: “Honey,” we’ll imagine you have a person you call honey before hitting them up for money. “Honey, I need $10, I lost my Metro card.” You get your $10, you buy your Metro card. Now, assuming you plan to pay Honey back — you are still down $10. You just put it off. Now, you need a Metro card (presumably that’s why Honey gave you $10.) And yes, we need a stimulus. But, we have to understand that there were other ways for you to get that $10 — for example, if you hadn’t been going to Starbucks for the past four weeks and buying their $3 wallet drainers, you’d have had enough money to buy your own Metro card. Well, it is also possible that if Honey wasn’t hoarding all the money, you could have simply pulled $10 from your own bank account and you’d’ve been fine. Neither happened. Instead, Honey drops you off at the Metro and buys you your Metro Card.
Borrowing from Honey costs her money now — and keeps her from buying things she wants. Borrowing from Honey cramps your style (that’s three days with no Starbucks!) If, however, instead, you’d been more moderate in your spending, you wouldn’t have had to borrow from Honey. Then you’d’ve been able to get your Metro Card, not cramped her style, and not given her $10 worth of leverage when it’s time to pick what’s at the top of the Netflix list. And, still, been able to give to the charity known as Starbucks.
In this analogy? America is you, China is Honey.
Borrowing also just moves debt around. You owe Honey $10, Honey is down $10 (but expecting it back. With interest.), and the Metro is now $10 richer. In this analogy — the Metro are the people you decide to give the money you took from Honey. In our stimulus’s case, go and read the behemoth to see who is getting the money that we’re taking. Gee willickers! It looks like it is supposed to go to us and Starbucks… which is where, if you recall, your money was going anyway.
So… what is the purpose of government taking money from us — and China — to put money where we — and China — were going to put the money anyway? Maybe not in the exact percentages the government wants, but last I checked, government was not that good with money. Seriously, it’s like they think they can just print more of it.
So what have we learned from Matt’s “my roommate’s alarm started going off at 5 and I couldn’t get back to sleep, hey, what’s on the news radio” morning rant? I don’t know. It is incoherent. But, we’ve learned he makes weird analogies on little sleep.