When is humor no longer funny?

[kandrathe]

Obama is also challenging the Reagan ideals of "Government is the problem" and "trickle-down". The "trickle-down theory," as it was called, is where the government reduction of tax collection is given to the rich, with the idea that the rich people will spend money and so the money will eventually get to the not-so-rich. (Add deficit spending and you have what Bush Elder called "Voodoo Economics".) Now for the Vanadoo Economics: I think the rich are the people who are most likely to send the money overseas one way or another, and the money leaves our economy pretty much permanently. Instead, give the money to the not-so-rich, and, guess what?!?!? They spend the money and then the rich people get it again anyway! ... ok, I'm no economist...

-V

Obama's last speech was fear mongering at its worst. {source}

Some quotes...

"We start 2009 in the midst of a crisis unlike any we have seen in our lifetime, a crisis that has only deepened over the last few weeks."

"Manufacturing has hit a 28-year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear. And many, many Americans are both anxious and uncertain of what the future will hold."

"We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and our standing in the world."

Oh my! What are we to do? Oh, wait. Here is the answer...

"Only government can break the cycle that are crippling our economy -- where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."

I see. Only government can solve this problem. Somewhere in the near future I expect to hear that phrase, "we must raise taxes now to solve this impending crisis". Because only the federal government can spend our way out of this recession. It's the only way. We will hear that the Bush Tax Cuts ("for the rich") must be repealed, when it's the middle class (not the rich) that have benefited the most from them. Government knows best how to spend your money to save the economy.

And, while he assures us, "That's why the overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, police officers, firefighters and others who provide vital services." Meaning some significant minority of these new jobs will be government jobs requiring new sources of revenue.

Then he squarely places the blame for this mess on the "Wallstreet wrong doers" who slipped through the regulatory cracks. Ahem. Fannie Mae and Freddie Mac were the mess of primarily the Presidents party who deferred corrective action on sub prime lending for over a decade. But, many politicians were culpable of taking the large campaign contributions from Fanny and Freddie in return for maintaining the status quo. Of course, fuel prices jumping from $2 to $4 per gallon wouldn't have any impact on this economic slow down now would it?

Here is hesitantly my answer Van. Spend the money on business development loans which will be used for creating or expanding small businesses employing less than 200 people. Here is the catch, the amount given will be determined by the number of people added to the businesses payroll and paid back over 10 years with very low interest. We might also encourage innovation in some way. I don't see that giving $1000 of tax payer collected money and then redistributed back to consumers to spend on a new washing machine will go very far in rebuilding confidence in the economy. But, put people to work where they have disposable income, and they will pretty much spend it.

The bottom line: The engine of the economy is not government, it is business. If you want to accelerate the economy, you need to invest in business. I don't like the idea of government taking money from people, and then giving it away again for other people to spend it as they see fit. This is why I would structure the stimulus as low interest loans to small and medium sized businesses which intend to improve the economy by hiring or other innovations which will lead to stimulus. Not hand outs, but revenue neutral over the tens years in such a way as to not be onerous for the small business.