Stop Bashing the Obama Administration's Stimulus Spending Policies

Originally posted by KarlG

Originally posted by Scarcer
Yes, but maybe you should note all the other bills and policies Obama is backing. Is it possible Obama is fueling both end at the same time? Oh no's!

Hm.. insecure borders, giving aliens jobs, taxes taxes taxes which leads to less consumer spending, potholed bailouts.

Oh I forgot though, to support your argument, Obama sure has invigorated the revenue of the sporting good stores! Oh wait, but hes trying to stop that too. Too bad :/

[edit on 7-7-2009 by Scarcer]

Reagan-Laffer's Theory:

High Tax Rates induce people to work for higher disposable post-tax income.

Proven by Ronald Reagan's Administration in 1981 when Arthur Laffer, working for Reagan, suggested increasing tax rates for higher government revenue. Reagan didn't want to, but he had no choice, and when the taxes were raised, an interesting phenomenon was found:

MORE people were going out to work, for longer hours, for less pay.

After a while, Laffer came up with the Laffer curve, which shows that people are more willing to work in situations of higher taxes so as to maintain their standards of living.
This resulted in the AS curve of the economy shifting right (AD-AS diagram, go google it, I'm sorry for the terminology): Basically the supply of labor INCREASED.

With this increase, and corresponding decrease in wage rates, firms could now afford to hire MORE labor, reducing unemployment and increasing economic produce and output because now it cost the firm less to hire workers - allowing them to channel $$ into production for exports (Marshall-Lerner condition: Exports and imports are in high demand in the long run).

Thus that's how rising taxes help, to a certain extent.

However, Obama needs to realize what to do with a PROGRESSIVE tax structure - i.e. the rich gets taxed progressively more because they're in a higher income bracket.

That way middle-class people will still head out to work (see the TIME magazine article weeks back featuring mothers who are re-entering the job market), but do not lose so much disposable income such that they cannot feed themselves and pay bills, the government gets the revenue they need, and the rich lose more money which is ONLY FAIR.

Let's face it, Michael Bay isn't exactly struggling to stay afloat in this economy, is he?

Good argument.

But when you raise the taxes on those with a high income, and say they own companies, depending on various variables allowing them to do this (competition etc.) - they can turn around and raise the prices of their products to cover the cost.

So raising taxes can also possibly raise the cost of living?

Originally posted by KarlG
I've done a bit of studies in Econ, and I need to discuss this with some people, because i am very confused that many people do not understand what the Obama Administration is trying to do, when it is clear to me from my textbook that they are doing what is technically right.

None of what you just wrote matters at all until the government addresses the underlying debt, both public and private, that is sinking the entire world to the bottom of the ocean.

Government don't save economies they ruin them. The best a government can do is to enforce laws that create a safe and fair business environment and reduce the tax burden as much as possible. If a government is trying to directly influence the market it has already failed.

You can take out all the slide rulers and algebraic calculations to formulate your theory but from the side of the consumer you have to understand the frustration of the common man. (woman)

When the economy takes a nose dive we see story after story, article after article about how WE the consumers can save money.

The Today show has "Experts" who teach you 10 ways to cut your monthly expenditures. Cut out some movie channels, lower your cell phone plan, borrow movies from the library....it goes on and on and you cant escape it.

Click on any news outlet on the web and find hints to stretch that dollar!

We've all been taught that when times get tough, its time to pinch those pennies and start clipping coupons.

Now here comes Mr.Govt. Instead of cutting costs, pinching pennies, and trimming those budgets, he prints his own money and goes on a lavish spending spree. Convenient for him, sucks for us.

We all end up footing the bill, the govt becomes more entrenched in private industry and in the end its not going to stimulate anything but a select few's pockets.

You want to help the economy Mr Govt? Then cut the spending, stop the bailouts, and spend what you do have on the things that matter. No more millions for bee research or new furniture in your govt offices.

Take a long walk down Main St. Anytown USA and maybe you will remember that these are the people that you are supposed to be serving, not the other way around.

Stop telling us to suck it up while your hands are dirty with ink from printing more money. So while the OP's theory may look good on paper....it isnt working and hasnt shown any signs it will work.

I believe this quote is befitting of this thread:

A government which robs Peter to pay Paul can always depend on the support of Paul.

George Bernard Shaw

guess who Paul is....

Op, saw the complex formulae and was impressed.

Just mebbe a simpler solution from a very simple person, decrease taxes, and let the people (who actually drive the economy) get all of us out of the resession/depression that we are in.

Just a simple thought.
I mean, I didn't go to an ivy league school
and sumtimes I don't talk purdy
but even I can figure this # out!

reply to post by KarlG


Your wrong the higher the spending by are government leads to the creation of money. Your understanding is somewhat accurate when you look at parts however as a whole your wrong. I guess ill explain how money is created this will surprise alot of people.

To keep it simple i own a bank you give me 100.00 to put in an account,Now my bank has assets of 100.00 we take that and the government says i can loan out 80% so I loan out 80$. Now on my books i have a deposit of 100.00 and i also have a loan of 80 meaning my assets for the bank are now 180.00. I just created 80.00 that didn't exist before this transaction. The fed does this but on a much larger scale. The more money the government spends the more money is created on paper only.

Here is where it becomes a problem every time the feds spend money they devalue the dollar. When the dollar devalues it effects trades with other companies and the stock market. Devaluation of the dollar can be worse than any tax simply because it takes more money to buy the same thing such as oil for example.

Now as far as fed expenditures not effecting citizens this is wrong as well for one the fed works on IOU also known as bonds (remember they have to create money through loans). Now when these come do they are going to pay out these loans and will likely have to create more money to again pay for it. The effect this has means as the national debt increases it happens exponentially. This debt will always have to be paid and this eventually leads them two 2 choices raise taxes of stop funding programs.
Guess which one congress will pick!

Also as the dollar devalues then in comes inflation to rear its ugly head. Don't have time for this right now but if people are interested ill continue on the effects of inflationary spending do to devaluation of the dollar.Botom line is your picking parts of the economy saying it helps here without looking at the negative effects it has else where.

reply to post by KarlG


Government debt may not be consumer debt, but the money still comes out of your pocket to either pay the credit card bill or pay the tax man WITH INTEREST.

There has never been a country that has beat a credit led recession by taking on more debt.

We won't be the first.

I urge the OP to look at market-ticker.org particularly page 3.

The road to Fascism is being paved. Is it blatantly obvious.

I beleive that man is a great president

Originally posted by dragonridr
reply to post by KarlG

 

Now as far as fed expenditures not effecting citizens this is wrong as well for one the fed works on IOU also known as bonds (remember they have to create money through loans). Now when these come do they are going to pay out these loans and will likely have to create more money to again pay for it. The effect this has means as the national debt increases it happens exponentially. This debt will always have to be paid and this eventually leads them two 2 choices raise taxes of stop funding programs.
Guess which one congress will pick!

No I don't think I was wrong... I didn't say taxes won't be raised. Taxes WILL be raised, yes, in order to finance the large debt that the government has incurred. But what else can be done? Governments depend on three sources of income for revenue, 1) taxes, 2) profits from nationalized companies, 3) banks.

I didn't "focus on one aspect of the economy" and ignored another. This is the equation for the GENERAL economy - spending WILL increase overall AD and will make things better in the long run. Sure we'll ALL have to pay higher taxes, but that will only come AFTER the economy starts recovering - a fair price to pay since the problem arised due to the excessive consumer spending when they didn't even HAVE the money to afford their housing and cars in the first place.

This part is apparently so easy an earlier poster (around the bottom of Page 2) was able to see that the housing market would crash, just based on the sheer amount of people who couldn't afford large, gorgeous houses putting down payments on new houses and getting second mortgages on old ones.

I did mention in an earlier post that taxes WILL be increased, though a progressive tax, meaning the rich get taxed significantly more than the working class due to their income being naturally higher, will actually BENEFIT society as this equalizes income disparity - the same PROPORTION of income will be taxed, instead of Bush's "rich get richer, poor get poorer" regressive tax.

Also, as mentioned, Reagan-Laffer's Theory does offer the possibility that more people will go out to work. Indeed, rising taxes will raise the standard of living, but it's only a natural accompaniment to the recovery of the economy - things will get harder to afford soon... and then will gradually become easier to afford.

Originally posted by grapesofraft
reply to post by KarlG

 

Government debt may not be consumer debt, but the money still comes out of your pocket to either pay the credit card bill or pay the tax man WITH INTEREST.

Which is the problem.

So many of you, (well, this is a conspiracy site, duh) make a lot of noise about having to finance the government debt. Clearly, you don't want them to spend, so you won't have to pay the higher taxes and you won't have to work harder and you don't want extra debt for yourself.

It's understandable, but THERE IS NO CHOICE.

The government NEEDS to spend to pump the money BACK into the economy when it was TAKEN OUT by greedy, good-for-nothing, useless, incompetent ******es.

Now here is what I find a problem with:

Folks, though the equation itself and the entire macroeconomic theory IS SOUND (do not doubt it, please) the problem here is that... *drumroll*...

The money IS NOT BEING PUMPED.

If you do a little research, you'll find that out of the trillions that was proposed to go into the economy - only 1 or 2 trillion actually ARE going into the economy. Then a couple more trillion going to bail out stupid idiots, and what's left? WHERE has it gone to?

If the money WAS being pumped into the economy and nothing was improving, rest assured I'll tear up my notes and eat them.

But it is NOT.

IPODS ARE NOT MADE IN THE USA!!!

Sorry, I had to get that out. I'm better now.

There is not much of anything that is made in the USA anymore. None of my American vehicles are made in the USA. Levi's aren't even made in the USA anymore.

I suggest everyone go and look for things in their homes that are actually made in the USA. The only things I've been able to find are books, cds, dvds, and video games -the games themselves, not the game systems- food, cleaning supplies, health & beauty stuff, and some medicines. I recently said to a friend that at least we still have Hershey Bars! Yeah...last week a bought one of their newest varieties...made in Germany!

Most people who buy products from "American" companies don't even realize that those products usually are not made in the USA. Even American clothing designers outsource their production because it is so much less expensive.

These days, I'm happy if I find things made in Canada, France, Germany, England or Italy because these products are typically well-made.

America has no industry. It is gone. We produce virtually nothing here. Even the government buys most things produced elsewhere - mostly because there aren't all that many options.

They should've been stimulating the economy by creating new industry. The American auto industry would've been better served by taking on a few of these truly innovative people who have created functional green autos and expanding the industry in my opinion.

I realize the general theory should work. However, we are not in a typical economy. We have no industry! HOW are they going to create new jobs? We have no industry! The government is taking care of themselves. What do we get for all of the taxes we pay? How do these taxes benefit us? I'm really not aware of receiving anything benficial from the government, other than maybe they really do keep us safe, and I feel that if that is the truth, it has cost us much more than tax money to do so.
From what I've seen, Medicare costs more than using private insurance and doesn't cover too much. Who knows if it will even be available if I live to be old enough to use it? Social Security? They tax me on it when they take it out of my checks, since I was 15 years old, I might add. Then they will tax me on it when I'm finally old enough to get it back. Though I doubt it will even be there if I reach that age.
How is anything going to work if there are no jobs, no industry, and no hope for either?
This country was sold a long time ago. We even benefited from the profits for the term of one of our great leaders.
Even if the money was piped into new industry and such right now, it would take decades to get us back to what we once were.
We need to start producing things!!!

Originally posted by FlyersFan

.. because the government is known to run everything so well and so smoothy and so brilliantly that we could rest easy knowning they own the banks. Right?

Who'd run them? Barney Frank? Chris Dodd? Obama?
Those weenies got us into this mess to begin with.

Brilliant! I vote for Dodd ruining.....er......I mean running everything. He's got it all together!

Where in the World Are Chris Dodd's Mortgage Papers?

Integrity is his middle name! Oh wait, my bad. It's John.

reply to post by KarlG


Yeah I took a few Econ classes way back when too... your right in that the plan had good intentions however execution of those plans was put in the hands of the very same greedy people who landed us here...

If the money was being used as intended...yes it would have worked.. of course we'll never know... seeing as how that $787 billions of dollars isn't being used to stimulate a damn thing
www.abovetopsecret.com...

reply to post by serendipitynow


Wow, I didn't know that.

What's made in the USA anymore?

Does anyone know?

I recently ate a bag of Dijon Mustard chips - those I am quite sure are produced in the USA. And Knotts Berry Farm Shortbread cookies - those, too. What else?

reply to post by DaddyBare


What I want to know from the govt is...

WHERE HAS THE MONEY GONE TO?

Making the plans is one thing. From the academic, economic point-of-view, the plans are sound, indeed. The academics ARE right.

But APPLICATION is a different thing.

And right now, the money is being "eaten up" somehow. Where is it going to? HOW is the money being applied?

Does anyone know?

Instead of focusing on the plans Obama is making - which ARE good, again - let's focus on ACCOUNTABILITY. Which really is the root of all problems we're facing today - accountability.

reply to post by DaddyBare


Hear, hear the voice of wisdom



You just nailed the issue right to the spot, my friend, a corrupted system can not be fixed by corrupted entities.

That is why the trillions of dollars already wasted in our nations economy is not working since the fall of 2007.

Too many interest groups and private agendas dipping into the cookie jar.

reply to post by KarlG


"Stop Bashing the Obama Administration's Stimulus Spending Policies"

They are wrong. I'll keep on bashing, thank you.

There are scores of articles written around the time of the preceeding Great Depression, and many more since. Most of those articles, written by economics experts, agree that overspending is as bad for a nation as it is an individual.

I have felt no improvenemt from Obama's "stimulus", and still see that layoffs and foreclosures continue unabated.