national debt

Feb 11, 2009

The Have Less Versus the Have More

Again, the "Have Less" are being played against the "Have More," by the collectivist pundits. They are quick to pimp out the "poor" in an emotional claim that the "poor" are being robbed by the "rich." The poor do not pay taxes, so help me understand how this money is taken from them.

The wealth of this nation comes from its means of production. If that means of production decreases, there are fewer jobs and less wealth created. The government and the poor of this nation are consumers of that production - not producers.

Unlike some, I do believe that maintaining the infrastructor by the govenment is a plus in such areas as creating and maintaining roads, bridges, dams, et cetera.

There comes a point at which the cost of government is more than we can afford. When the government responds to recession with more spending or less taxes, it results in printing more money. If more money is printed, it becomes worth less. We call that inflation.

For those that are employed, they can somewhat keep up with the inflation in the cost of living. For those on a fixed income, that is not so. They see their buying power decrease daily.

Some of the fixed income issues are resolved by entitlement programs, but that results in more printing of money. The end result is the spiriling inflation rather than a leveling off.

This is particularly so when entitlements become such a high percentage of government spending. The increase in entitlements can account for every one of the yearly deficits since 2001, when Speaker of the House Dennis Hastart took office. The safety net became a hammock.

The cost of government has steadily climbed since 2001 as well. That can be calculated in a relative way by dividing the U.S. budget by the U.S. Gross Domestic Produce. That was less than 18.5% before 2001 and was beyond 21% with the 2007 budget.

During the campaign, President Obama said he would keep it down to the levels of President Reagan, which was, by his statement, 18.5%.

The best figure that President Obama claims of the Stimulus Plan is that it will create four million jobs. Regardless of how the final bill he signs is tuned to, it is going to be over $800 billion. If the Stimulus Plan is about jobs, then each of those jobs is going to be created at a cost of $200,000.

As I wrote at first, I believe the infrastructure is a valuable investment for the government. This is particularly so in areas where private industry cannot create those things that are needed by the public, like roads, bridges, and dams. A little thought would add such alternatives as solar/wind generation and information technology (satellites/internet) as well. From looking at the budget, that is a very small percentage of the budget.

Most expenditures in the Stimulus Plan that are on my "dream list" of projects that have nothing to do with either creating jobs or building up the infrastructure. Unfortunately, they are not expenditures that are likely to stimulate the economy.

In regard to the politics of the Stimulus Plan:
If the Republicans are correct and the Democrats are wrong, the Stimulus Plan will stimulate a a return to Republicans to power. Bipartisanism is just a way to avoid that.

On the other hand, if the Republicns are wrong and the Democrats are correct, the Democrats will claim a great victory and demolish the Republican Party for a century.

If three million jobs are not created and the economy continues to spiral downward, it will not go well with the Democratic Party. If the increase in spending and printing money cause the economy to go into an inflation spiral, then there will be fewer Democrats in office.

If the unemployment rate goes into double digit figures, then there will be a loss of the House in two years. If it continues after that, there will be a loss of the Senate.

Since a similar stimulus plan was attempted by Japan in the 1990s and failed, it gives good reason for the confidence of the Republican Party in rejecting the Stimulus Plan of 2009.

If this were a stock market issue, the bullish Democratic Party is buying on the margin and the Republican Party is bearish and selling short.

1 comment:

site said...

This won't succeed in reality, that is exactly what I think.

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