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The editorial “Recession over: Jobs needed” seems to imply that the government has somehow suggested that all we need is jobs resulting from government spending to pull us out of the ditch. Surely the editors understand that the stimulus was meant to get money flowing through the economy and those expected to be hired would be spending the money earned which would encourage employers to hire more people and on an on. The stimulus was meant to be a temporary shot in the arm to the economy when consumer spending, 70 percent of the normal economy, was absent.
What the results so far tell us is that, either those who are working are still not spending, but saving, or that the stimulus needed to be far larger, which was the prescription of many knowledgeable economists. The government spent the money and private enterprise was where they spent it and state governments were also the recipient of some of the stimulus money to keep strapped states operations going — necessarily spending it.
Was the editorial simply an observation of reality or do the editors feel that there was a better and quicker way to get things moving? If the recipients of the money didn’t spend it, then what? Many locals thought that tax cuts were the magic elixir that would get things moving. Analysis of the tax cuts that did take place indicate that most of the money freed up went into saving and paying down excessive debt.
So what is the answer? The money was put into the economy but not enough has happened, thus far. But there has been some movement. More stimulus is needed, much more. What do the editors think of that idea?
JOHN BORGEN
Grand Junction
9 Responses to “More stimulus is needed”
Posted November 3rd, 2009 at 12:55 pm Login to Send PM Report this comment
“the stimulus needed to be far larger” That is one of the most frightening statements I have read in a long time. It is one to give one with some knowledge of economics nightmares. Halloween was last month.
Posted November 3rd, 2009 at 1:15 pm Login to Send PM Report this comment
Here is what we don’t need: more government spending using money we don’t have. We don’t need to raise the deficit further. What we need is some indication of what this government intends to do to fix a deficit which the president himself said keeps him awake at night. A deficit which puts a ball and chain around our economy for years to come. More cash for clunkers will not fix the economy or the deficit. Sending seniors a check for $250 will not fix the economy or the deficit.
Private enterprise, not the government, is the source of jobs and economic growth. And private enterprise does not have a clue as to what further damange this president and this congress is planning to inflict on it.
We know about all of the spending being planned; what we do not know is who is going to pay for this irresponsible behavior.
Perhaps if the president finds a little time in his schedule, while he is not traveling, giving campaign speeches, or appearing on TV talk shows, he can devote a few minutes to thinking about how he is going to get us out of the hole that he has put us in.
Posted November 3rd, 2009 at 9:30 pm Login to Send PM Report this comment
John,
You should probably take some time and tune in to the election results across the country this evening. In case you are not getting the message the Democrats took an *** whooping which should be a clear sign we don’t want another “stimulus”. Printing up more money and burdening future generations with the waistful wishes of non-reprenting representatives will hopefully be a thing of the past but nice try.
Posted November 4th, 2009 at 8:51 am Login to Send PM Report this comment
What I didn’t see in the above comments was what the commenters prescribe for our predicament. Natural tendencies of capitalism and private enterprise without effective regulation got us into this predicament. Why won’t it get us out?Automatically ? Deficits? Cut government spending, large amounts of which are going to unemployment benefits and other expenditures of support for those hurting? Cut those expenditures? Prolong the near-depression and prolong relief expenditures? Who is going to have to pay for all the debt? Who always pays, the taxpayer. When? After recovery. What will make consumers want to start spending instead of saving and paying back their debts? Why should businesses spend and hire when there is limited demand for their products and they have excess capacity anyway? All those things have to be considered and all the flag waving for “private enterprise” and doctrinaire rhetoric won’t get us out of the hole we are in. Actual analysis and pragmatic thought followed by action is required, not dogmatic, partisan howling without plans that attack the problem on the ground. There is no magic of the market that solves all ailments.People who want to attack the problem, not each other, will be the way out. For now, much more stimulus is needed and taxpyers will have to pay for it with their taxes and healthy economy that generates governmental revenue. You can’t wish the problem away. With nowhere left for the Fed to use the usual interest rate method of fighting a slack economy cutting back expenditures from both consumers and government is sure to not increase economic activity. The deficits and debt can be dealt with in the future. People suffering right now can’t wait fo a “natural” recovery for a problem that is one of the worst in our country’s history. You may recall that the people who are personally having to deal with this recession are not the people who caused it but we’re all going to have to shoulder the cost of getting out of it. Inaction won’t do it.
Posted November 4th, 2009 at 11:18 am Login to Send PM Report this comment
The Obama administration claims that their stimulus packages took us from the brink of disaster to stabilization. Wrong!
What took us away from the edge of the precipice was quick action by the Federal Reserve and the Treasury which flooded the financial system with money, put guarantees on money market funds, on bank loans, increased FDIC insurance, and many other steps.
The stimulus package was a giant bag of goodies and pork barrel spending, much of which has not even been spent yet. Most of what this stimulus is doing is saddling the country with a huge deficit for years to come.
The Obama budget shows the recession ending this year. John says the deficit will be attacked after the recession is over. But why is the Obama budget showing trillion dollar deficits in 2019 AND RISING? And those projections do not even include the deficits that will come from their health care proposals?
The stimulus package should have been aimed directly at job creation and consumer spending. Suspending the social security tax for both consumers and businesses for two years would have helped tremendously and would have provided a substantial increase in take home pay. That is one idea that was suggested and discarded.
Yes, this government will be raising taxes like no government has ever raised taxes before. And the negative impact of those taxes on the economy will be very heavy. The deceit here is that the Obama administration chooses to get its spending passed first and then come back as the big deficit fighters once the deficits are out of control.
Spend, spend, tax, tax. That is the liberal way. Luckily for us, they will be out the door in one more year.
Posted November 4th, 2009 at 1:21 pm Login to Send PM Report this comment
The liberal way is to honestly size up the problem and devise a potential solution knowing full well there are no guarantees in human events. The idea that cutting payroll taxes is the answer overlooks the fact that people are already demonstrating that they will attack being deeply in debt and not spending. How much tax reduction will make people forget their debts, the uncertainty of their jobs, and all of th other concerns resulting from the biggest financial problems since the great depression. Why aren’t people who have the money spending it? Why are they holding back? Finally, what happens to tax revenues when they aren’t collected? Government stops? That doesn’t contribute to deficits, too? Face it, th administration feels that this is the best route to a quicker recovery. If it doesn’t work they’ll have to answer for it. And if they took the doctrinaire advice from Republicans and that didn’t work, they’d have to answer for that, too. The days of people automatically spending a “windfall” are probably over.
Posted November 4th, 2009 at 1:50 pm Login to Send PM Report this comment
John: “The liberal way is to honestly size up the problem and devise a potential solution knowing full well there are no guarantees in human events.”
If that was true, John, this concentration on passing a trillion dollar health care bill in the midst of the worst recession since the Great Depression, and on top of deficits that are scaring the bejeesus out of people, would have been postponed until the economy was on its way to recovery and a sound program in place to lower the deficits. Polls clearly indicate that in the order of priorities, the economy is at the top for the American people and health care reform is well down the list.
“The idea that cutting payroll taxes is the answer overlooks the fact that people are already demonstrating that they will attack being deeply in debt and not spending. How much tax reduction will make people forget their debts, the uncertainty of their jobs, and all of th other concerns resulting from the biggest financial problems since the great depression.”
You are correct that people are worried about their lack of savings after their 401Ks caved in and their home values collapsed. Nevertheless, a rise in their take-home pay that is certain and would last for a couple of years would surely increase their spending as opposed to getting a check in the mail or a temporary incentive to buy cars which only accelerates car buying plans that would have taken effect later.
“Why aren’t people who have the money spending it? Why are they holding back?”
I can tell you from personal experience that, while my job was not affected, my wealth sure was by the factors mentioned earlier and that led me to cut my spending. Now that market conditions are improving, and I feel that the worst is behind us, I am starting to spend more. And if my taxes had been lowered, my spending would be going up further.
“Finally, what happens to tax revenues when they aren’t collected? Government stops? That doesn’t contribute to deficits, too?”
Certainly. Any stimulus package would temporarily add to the deficit. I agree that stimulus was needed, I am just arguing for a different sort of stimulus than what we got. I am arguing for stimulus that would have gotten the economy moving faster, was truly temporary, and would not increase our deficits over the next ten years.
“Face it, th administration feels that this is the best route to a quicker recovery. If it doesn’t work they’ll have to answer for it.”
And answer they will. Of that I am convinced. And that answer began yesterday.
Posted November 4th, 2009 at 3:17 pm Login to Send PM Report this comment
John - The potential solution that the liberals in power are working on will put us in tremendous debt (not a solution just a way to pass the buck to the next generation) and destroy the value of the dollar. I’m not spending because I am not sure when or if the next shoe will drop. Devaluation of the dollar by subsidizing a lower interest rate (monetizing our debt) will eventually cause inflation. It also makes investing in America a risky proposition. The price of everything will go up and has already started to at the basic level look at oil, gold and other commodities. These increased raw materials costs will get passed on to consumers in higher prices but it doesn’t look like wages are going to increase in tandem. Add to that the spending of $1.2 trillion on healthcare (who is going to buy that debt? - the Chinese are just about done with buying our debt and are instead buying the commodities mentioned previously). The Chinese, Brazilians and other influential nations are already looking to develope a new global currency because they have waning faith in the dollar. Why would anyone spend at this point unless it is for the most basic of needs? The administration may have to answer for it eventually until then their mantra of “mopping up someone elses mess” is starting to sound a little hollow.
Posted November 4th, 2009 at 3:37 pm Login to Send PM Report this comment
People like John want to throw capitalism out the window because it is less than perfect. What they ignore is that state managed economies they desire have been tried and have failed. Anyone notice North Korea exporting food recently? How is Cuba doing without its handout from the USSR. If they got no handout from Venezuela they would really be hurting now. China’s economy only took off when they allowed private enterprise to thrive.
Capitalism will have its ups and downs, bumps and bruises. It is referred to as the business cycle. When you compare the incentive based psychology to the do just enough to get by motivation of other economic systems you will see that capitalism out performs the others hands down. Adam Smith’s invisible hand is out there. Why don’t we experiment some other place like Eastern Europe or Cambodia?
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