Is increasing demand enough? The lefties around here will tell you that all we gotta do is give more money to the lower income people, they'll spend it, demand goes up, and our problems are over. Sounds simple. Too simple. It ain't that easy, and this why:
My first issue is with the idea that the extra money will all get spent; I think that is a fallacious argument, especially at a time like this when people are scared of losing their job or their home. I'd venture a guess that most people have had financial problems themselves or know someone who has, be it a friend, neighbor, or family member. Some of the money will get spent, say for school supplies in a couple months, or for Christmas maybe, but some of it will be socked away for emergency use should things go from bad to worse. IOW, you ain't going to get the boost you think you are.
Then there's the question of how money are we talking about and how many people are going to receive it. Are we talking a one-time good deal stimulus, or a longer term program of redistribution of wealth? The last stimulus did give us a bounce, but it hasn't lasted. Sure, we're better off than we were in January 2009, but is that anything to brag about? The benefits we were told about then did not materialize, why should we believe the next one will do any better? Some talk of the stimulus we got as a result of WWII as a success story; but do you realize how much gov't spending went up during those 5 years from 1940 - 1945? $10 billion in 1940 to $107 billion in 1945, that's a tenfold increase. Our current spending is about $3.5 billion, anybody here wanna argue for a $35 billion dollar budget in 5 years time?
Okay, say instead of a stimulus you do a permanent redistribution of wealth, with a sunset of 10 years like the Bush Tax Cuts. Raising the top marginal rate back to the 40% it was under Clinton gets you $70-80 billion in more revenue, I don't think that's gonna go very far spread around the bottom 70 or so million people on the south side of the income ladder. You going to borrow the rest? How much money will that be, and how do you intend to pay the interest payments when interest rates go back up eventually? They will you know, the historical average is around 5%, can you imagine how much we'd have to pay out just to service all that debt?
Increased demand is obviously necessary; but that money has to come from somewhere. Seems like the solution to every problem for the lib/dems is to take more money from the rich guys. But they won't accept the idea that there are consequences for that, those who can will leave and those who can't will stop using that money to invest in startups or expanding businesses. If the reward isn't worth the risk, they won't do it; instead more money will go into tax shelters or offshore. Look at what's happening today in the PIIGS countries; they're taking their money out of the local banks and moving to London or somewhere else, and they're doing it in droves. You don't have to like it, but that's the way it is.
My first issue is with the idea that the extra money will all get spent; I think that is a fallacious argument, especially at a time like this when people are scared of losing their job or their home. I'd venture a guess that most people have had financial problems themselves or know someone who has, be it a friend, neighbor, or family member. Some of the money will get spent, say for school supplies in a couple months, or for Christmas maybe, but some of it will be socked away for emergency use should things go from bad to worse. IOW, you ain't going to get the boost you think you are.
Then there's the question of how money are we talking about and how many people are going to receive it. Are we talking a one-time good deal stimulus, or a longer term program of redistribution of wealth? The last stimulus did give us a bounce, but it hasn't lasted. Sure, we're better off than we were in January 2009, but is that anything to brag about? The benefits we were told about then did not materialize, why should we believe the next one will do any better? Some talk of the stimulus we got as a result of WWII as a success story; but do you realize how much gov't spending went up during those 5 years from 1940 - 1945? $10 billion in 1940 to $107 billion in 1945, that's a tenfold increase. Our current spending is about $3.5 billion, anybody here wanna argue for a $35 billion dollar budget in 5 years time?
Okay, say instead of a stimulus you do a permanent redistribution of wealth, with a sunset of 10 years like the Bush Tax Cuts. Raising the top marginal rate back to the 40% it was under Clinton gets you $70-80 billion in more revenue, I don't think that's gonna go very far spread around the bottom 70 or so million people on the south side of the income ladder. You going to borrow the rest? How much money will that be, and how do you intend to pay the interest payments when interest rates go back up eventually? They will you know, the historical average is around 5%, can you imagine how much we'd have to pay out just to service all that debt?
Increased demand is obviously necessary; but that money has to come from somewhere. Seems like the solution to every problem for the lib/dems is to take more money from the rich guys. But they won't accept the idea that there are consequences for that, those who can will leave and those who can't will stop using that money to invest in startups or expanding businesses. If the reward isn't worth the risk, they won't do it; instead more money will go into tax shelters or offshore. Look at what's happening today in the PIIGS countries; they're taking their money out of the local banks and moving to London or somewhere else, and they're doing it in droves. You don't have to like it, but that's the way it is.
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