Economic Stimulus a la Jamie

So granted, I am not an economic major. Nor am I very interested in math and numbers and economics in general. That is why I have more or less kept silent on the current state of the economy. But I am furious that the majority of the American populous believes the economic stimulus plan is a good thing. I think that living in California has given me a different perspective on this then I would otherwise have. I'm sure many know by now that California is slipping toward bankruptcy. They are sending out IOUs in place of tax refunds. In a time when those of us who are parents are wondering how we are going to pay for healthcare and life insurance and assure that our childrens' basic need are met, our state government is stuck at a gridlock. And one that they don't seem to be in too big of a hurry to overcome. The legislators get paid six-figure salaries while the state is cutting public work projects and educational spending. California is slated to close schools across the state, and yet legislator's are taking trips to Hawaii (don't believe me? check this out). California is an example, albeit on a grander scale, of the problem with politicians today. They are too detached from the day-to-day struggle of their constituents. They spend without retraint and expect us to foot the bill. I understand the importance of taxes. But only if my taxes are being put to good use. The reality of the stimulus package is that the federal government is increasing the national budget by $800 billion at a time when they should be cutting spending in order to stablize a drowning economy. And they are throwing the money into investments that they know will be bad in the long run. Sure, in the short term they could weild positive results (and I could be made Queen of the Universe tomorrow). But in the end it will merely dig us further into this recession.

Don't believe me? Think of it this way, then. What happens when you flood the market with a product? The supply increases while the demand decreases, thereby driving value down. The same would happen if there was an influx of treasury bonds. Investors, who are more concerned with the longterm, are going to remove their money from such risky investments and put it into other, more stable investing opportunities. So what does this mean for us? It means a reduction in economic output for the future. And an increase in national debt, coupled with a decrease in the value of treasury bonds, equals less consumer buying power. And to think that lawmakers are going to stick to their word to trim spending back down to 2008 levels for 2010 is beyond niave. When has the government ever reduced spending? I mean significantly? It is easy for politicians to talk about a reduction in spending, but it is painful for them to actually implement a program that would do just that. No one wants to be the one to make a sacrifice. But we all will have to take one for the team, so to speak, if we are to get out of this crisis.

So here is what I propose. There is a freeze on federal spending (and I am talking a real freeze. Not a freeze until special interest groups get upset, and then telling them "well, of course not a freeze for you. You're special. You're important. You really need the money. The rest of America must be made to suffer so that you can have a positive cash flow"). We implement a twelve month tax cut (and I mean significant tax cut. Say, %75). That way the people who actually control the ebb and flow of the economy (the consumers) gain buying power. After they begin to feel more comfortable with with their economic footing, the consumers will do what they do best. Consume. Americans love to spend money. They love big cars, big homes, and big debt. And once they feel more at ease financially, they will slip back into old habits. Because no one really wants to save.

Here is the last step in my economic stimulus plan. And this is a big one, so pay attention. The last step is for the American people to stop crying about how the government done did them wrong. The governement didn't force mister Joe American to get married and have seven kids while making $20,000 a year (this is not a commentary on the pros and cons of population control, so please don't take it as such). The government didn't force Joe American to incur a $30,000 car loan while he was still paying off $10,000 in student loans. And the government didn't force him to then go and get a $600,000 mortgage that he could never hope to afford. Now, I am being a bit overly-dramatic here, but you get what I'm saying. Unless we start taking responsibility for our circumstances, we are never going to overcome them. I have never thought it was the government's job to find me a job. I never thought it was the government's job to buy my groceries or pay my bills. And if I can't do so, it is not the government's fault. It is mine. And it is greedy CEO's who thought that nothing could touch them, and so they didn't know when to say when. But none of this is the fault of the government. And I am not saying that there are not people in genuine need of government assistance. But that is my fault too. Because I failed in my social responsibility toward that person, the government is forced to step in and take over. And they will never provide for that person as well as I could have had I taken my social responsibility to heart.

We have to remember that the reason our government works is because we have the power (theoretically, at least). If we are so weak that we relinquish that power to a big, amoral entity such as the federal government at the first sign of struggle or hardship, then we are undeserving of that gift that our ancestors fought so hard to give us.

I apologize for the gravity of this post, but I had to get that off my chest. If you made it this far, then don't despair. I will have plenty of adorable pictures of Lily to post tomorrow.