I hear our economy has reached an epic low point and may soon go even lower. Is this a recession or a true depression? Is this downturn is worse than the 1929 depression, the depression 10 years prior, or even the late ‘70’s Jimmy Carter downturn? Are the answers to these questions above my pay grade? Are they above the President Obama’s pay grade? Probably yes for me and probably yes for him also, but even so we are both doing something about it. I’m currently travelling on business and currently sitting in an airport writing a blog post. President Obama is travelling around trying to convince others that spending an historically unprecedented amount of money is the right way to kick start our economy.
Now I’ve heard this super duper hawk your kids, your grandkids and their kids spending spree referred to as both an economic stimulus package and a government stimulus package. What gives? Are government and economy the same thing? Is it like taxes and fees where to my wallet they are both the same, but to those collecting my money love to explain how taxes are not fees and fees are not taxes, oh and surcharges are neither taxes nor fees. So there could be actually be a difference even though both will cost the taxpayers their hard earned money. So what is it? Let’s see, an economic stimulus package is meant to stimulate the economy and a pig stimulus package is meant to stimulate little porkers, then a government stimulus package must be meant to stimulate the government.
So what kind of stimulus do we need, and what kind of stimulus is our president pushing? Is he pushing to stimulate the economy or the government?
One definition identifies an economy as involving production, exchange, distribution, and consumption of goods and services. Whether it was the housing bubble, the credit bubble, former Pres, Bush or whatever, that caused the problem, the fact remains that right now people are not so readily exchanging their money for goods and services. So businesses are cutting back on the resources needed to produce the unwanted goods and services leaving us working folk with less money to spend on consumption which leads to more cutting back, etc, etc. That vicious cycle is our down economy.
That’s the simple, yet accurate explanation of an economy so I’ll use an equally simple and accurate explanation of government.
The act or process of governing, especially the control and administration of public policy in a political unit.
So here is the big question. To kick start our economy, do you need more money in our life or do you need more government?
Do we need to make it easier for businesses to produce and us to consume or do we need more governing, control, administration and policy from our government?
The correct answer for stimulating the economy is more money in the hands of those who will either spend or produce with it. If you incorrectly answered more government then here’s another chance for you to get this right.
What is the best way to handle your personal finances?
A) Run up credit card debt
B) Run up a credit debt in your children’s name
C) Take out a large loan that you have no intention of paying back
D) Limit spending to essentials and resist borrowing.
E) Write bad checks
The correct answer is… and I hope you knew it….. is D. However, if you still didn’t get it right, don’t feel too bad, most of congress and the office of President Obama are having trouble with this concept also. The President’s plan is huge beyond the ability for most of us to understand, but here is what President Obama featured as part of his plan.
- Doubling the production of alternative energy in the next three years.
- Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills.
- Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.
- Equipping tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries.
- Expanding broadband across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.
- Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.
You see the stimulus package, no matter whether you refer to it as economic or government, is terribly heavy on government involvement in our lives and terribly light on keeping out of private business and leaving money in the hand of those who earned it. Around 1/3 of the program is aimed at tax cuts that will keep more money in the hands of people and businesses, but the remaining 2/3 is devoted to expanding the role of government in our everyday life; this expansion to be paid for by you, your kids, your kid’s kids, their kid’s kids and so on.
Yes, right now President Obama and the Democrats in Congress are burdening us and our children with unimaginable debt. Don’t get me wrong; I don’t like that former President Bush pushed big debt on us late in his term, but here is another example of 2 wrongs not making a right.
My thought is that our economy does not need our government to simply print more money. Our economy does not need more taxpayer backed risky credit and our economy does not need more government involvement; it’s had enough already.
We don’t need more debt, we need more patience and more tax cuts.