- Jun 6, 2007
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We Americans have to stop drinking the cool aid accompanying this stimulus bill. We Americans have to stop accepting and believing the false and impossible promises of this stimulus bill. The establishment line with respect to the stimulus bill is that if we just quickly inject this $825 billion stimulus monies into the U.S. economy we will jolt the U.S. economy back to normal. Apparently, the only thing that this economy needs is an adrenaline boost which the stimulus bill monies will provide and everything will be normal again like it was two or three years ago. If American would stop and really think it through, that is consider what it is going to take to bring the economy back to normal, they would realize that the promises of this bill are false, impossible and utter foolishness. However and it cant be emphasized enough a stimulus bill is needed to return Americas economy to good health just not this one which is a piece of legislation that if enacted would end-up squandering a lot of the American peoples money.
Last year, the U.S. economy lost 2.5 million jobs and consider the break down of these job losses. Essentially, 100,000 plus in the banking industry, close to 50,000 plus in the pharmaceutical industry, 50,000 plus in the airline industry, 50,000 plus in the insurance industry. The U.S. government spending one trillion plus dollars over two years is not going to replace these jobs, the nature of these industries has changed to dramatically for such to be the case. The investment banks that created these jobs are no more or if their in existence their bank holding companies and in the future they will operate in a more conservative manner. Moreover, the government absolutely has to dramatically increase regulation of Wall Street to stop the dangerous and irresponsible behavior that has and could well recur so that in the short term Wall Street being a major jobs engines is completely unrealistic. The U.S. government has to dramatically change the pharmaceutical industry so as to reduce Americas health care costs resulting in a pharmaceutical industry that only really significant increases profits for real scientific advances not for marketing initiatives, again resulting in a pharmaceutical industry that will not be a great jobs engine in the short term. The airline industry clearly and without question doesnt offer hope for being a big job engines in the short term because many airline companies almost certainly will not be dramatically growing in the near term for they are just coming off experiences where they were close to or in bankruptcy plus the price of jet engine fuel is not stable, one of their biggest expenses, and one can rest assured jet fuel prices will dramatically increase from todays prices in the short term as the price of oil rises as the world comes out of its recession. If one looks at the fundamental conditions in many other U.S. industries where there were significant job losses, there exist insurmountable conditions that dictate that these industries will not be big producers of jobs in the short term.
If one looks at some of the structural changes in the U.S. economy that this recession has permanently wrought on America, it is crystal clear that the U.S. economy is not going to bounce back to normal within two years. The housing industry existing prior to the recession and all the economic activity that rose out of this industry have been an integral part of the U.S. economy. What must happen going into the future is that mortage lenders in America must only be permitted to make mortgage loans to home buyers that they can afford. No more inflated income assessments from mortgage burrowers, no more reliance on extraordinary home price increase enabling burrowers to refinance their mortgages, no more mortgage loans that dont have limits on interest rate resets where the American people can know the burrower can afford the loan so there wont be a systematic defaulting on mortgage loans resulting in the foundations of the nations economy being shaken. In short, because of the necessary tightening of mortgage standards which must occur in America to protect all those individuals and entities which mortgages impact, there will be no great increase in housing starts in the foreseeable future mandating the conclusion that the housing industry doesnt offer the promise of being a big jobs engine in the near term.
The bottom line here, is that the stimulus bill should be focusing on the long-term health of the U.S. economy. The U.S. economy doesnt need an adrenaline shot, it needs to be nursed back to health. It needs aid being provided to it over a three, five and seven year time frame. A two-year recovery time period is a pipe dream, it is hard to think about the recession not ending soon and one can sense the American peoples desperation to have that good outcome occur, unfortunately though it aint happening even if Washington produces a perfect stimulus bill. Therefore, the thrust of this stimulus bill shouldnt be to inject this $825 billion into the economy over the next two years rather the thrust should be to spend this money to produce long-term economic benefit to America even if it takes three, five or seven years to spend this money, of course the government should immediately begin aggressively spending this money, but again the guiding star for the bills spending should be to wisely spend the monies to make the best effort to make the U.S. economy long-term healthy. The whole tone, public perception and the whole essence of this stimulus bill has to change from a short term treatment for the economy to a three-five-seven year treatment for the economy, this is the only way this legislation will be really effective. America needs to see a cessation of politicians and experts running around America and popping up all over the media clamoring Americas got to get this stimulus money into the economy over the next two years or it will be catastrophic, it will be catastrophic if America squanders this stimulus money this should be the chorus accompanying this bill. The critics of this bill are right when they say that if this bill was just passed as it is today when all the spending authorized by this bill is done what the America people will be left with to a large degree is just that the government spent a lot of money there will not be the long-term positive effects on the U.S. economy that the America people are being lead to envision.
Washington politicians needs to start listening to those economist that say the recession has to largely run its cycle. There is no switch that Washington can flick-on to get business to start investing and hiring again. An economic recovery from a recession is a process that takes time. Certainly, the government can help that recovery process, but there are no quick fixes. Washington has to stop forming this stimulus legislation as if there is a quick fix to the recession because what they are going to end up with is a failed fix to the recession and instead of a three to five year recovery time frame the nation will experience an eight to ten year recovery time frame, needless to elaborate on the hardship this will mean for the many Americans hurt by the lingering recession.
That is not to say that a significant portion of the foundation of the current stimulus bill isnt good and shouldnt be included in the final version. If the contents of the stimulus bill reported in the media are correct, there is a workable draft that can facilitate the timely passing of a stimulus bill. The State fiscal relief of $79 billion and the Medicaid to states of $87 billion is largely good-to-go, states have been, are and will be over the near term hurting from the loss of tax revenue from the recession and it is absolutely the right thing to do for the government to do to help the states in this way; it will be getting the states through this two year revenue loss hump the recession will likely bring. The $5.1 billion for job training, $8.6 for Medicaid for unemployed, $21 billion for Alleviating Hunger and $36 billion for Unemployment benefits seems to be largely good-to-go expenditures. Helping Americans who lost their job due to the national recession is again just the right thing to do. Spending billions to help those who lost their jobs due to the recession with health insurance costs is definitely the right thing to do; however, the $30.3 billion reported in the media to be spent for cobra health care for the unemployed raises some questions to ordinary Americans, it seems like maybe it is too high. The cobra program entails that when an employee loses his or her job with an employer, the employee has the right to continue with the health insurance coverage that employee had with his or her employer the only catch is that the employee just has to pay the portion of the premiums the employer had been paying for the employee besides the employees portion of the premiums. The question that many Americans would have about this stimulus legislation expenditure is that many of these layed off workers had better than your basic high deductable health insurance coverage with their employer and many ordinary Americans are living with this basic bare bones coverage which raises the question why should I as a taxpayer be paying through this stimulus bill for a health insurance plan, that is supposed to be just part of a social safety net, that is better than mine it doesnt seem fair.
To a large degree the balance of the stimulus bill presents the real issues. The balance of the provisions have the real potential to have a significant long-term impact on America and its economy. The public discussion must be held and the legislation processes must be effectuated so that the nation makes wise and its best efforts to have these stimulus expenditures optimally help America have a strong and vibrant economy and put this recession in the past.
Last year, the U.S. economy lost 2.5 million jobs and consider the break down of these job losses. Essentially, 100,000 plus in the banking industry, close to 50,000 plus in the pharmaceutical industry, 50,000 plus in the airline industry, 50,000 plus in the insurance industry. The U.S. government spending one trillion plus dollars over two years is not going to replace these jobs, the nature of these industries has changed to dramatically for such to be the case. The investment banks that created these jobs are no more or if their in existence their bank holding companies and in the future they will operate in a more conservative manner. Moreover, the government absolutely has to dramatically increase regulation of Wall Street to stop the dangerous and irresponsible behavior that has and could well recur so that in the short term Wall Street being a major jobs engines is completely unrealistic. The U.S. government has to dramatically change the pharmaceutical industry so as to reduce Americas health care costs resulting in a pharmaceutical industry that only really significant increases profits for real scientific advances not for marketing initiatives, again resulting in a pharmaceutical industry that will not be a great jobs engine in the short term. The airline industry clearly and without question doesnt offer hope for being a big job engines in the short term because many airline companies almost certainly will not be dramatically growing in the near term for they are just coming off experiences where they were close to or in bankruptcy plus the price of jet engine fuel is not stable, one of their biggest expenses, and one can rest assured jet fuel prices will dramatically increase from todays prices in the short term as the price of oil rises as the world comes out of its recession. If one looks at the fundamental conditions in many other U.S. industries where there were significant job losses, there exist insurmountable conditions that dictate that these industries will not be big producers of jobs in the short term.
If one looks at some of the structural changes in the U.S. economy that this recession has permanently wrought on America, it is crystal clear that the U.S. economy is not going to bounce back to normal within two years. The housing industry existing prior to the recession and all the economic activity that rose out of this industry have been an integral part of the U.S. economy. What must happen going into the future is that mortage lenders in America must only be permitted to make mortgage loans to home buyers that they can afford. No more inflated income assessments from mortgage burrowers, no more reliance on extraordinary home price increase enabling burrowers to refinance their mortgages, no more mortgage loans that dont have limits on interest rate resets where the American people can know the burrower can afford the loan so there wont be a systematic defaulting on mortgage loans resulting in the foundations of the nations economy being shaken. In short, because of the necessary tightening of mortgage standards which must occur in America to protect all those individuals and entities which mortgages impact, there will be no great increase in housing starts in the foreseeable future mandating the conclusion that the housing industry doesnt offer the promise of being a big jobs engine in the near term.
The bottom line here, is that the stimulus bill should be focusing on the long-term health of the U.S. economy. The U.S. economy doesnt need an adrenaline shot, it needs to be nursed back to health. It needs aid being provided to it over a three, five and seven year time frame. A two-year recovery time period is a pipe dream, it is hard to think about the recession not ending soon and one can sense the American peoples desperation to have that good outcome occur, unfortunately though it aint happening even if Washington produces a perfect stimulus bill. Therefore, the thrust of this stimulus bill shouldnt be to inject this $825 billion into the economy over the next two years rather the thrust should be to spend this money to produce long-term economic benefit to America even if it takes three, five or seven years to spend this money, of course the government should immediately begin aggressively spending this money, but again the guiding star for the bills spending should be to wisely spend the monies to make the best effort to make the U.S. economy long-term healthy. The whole tone, public perception and the whole essence of this stimulus bill has to change from a short term treatment for the economy to a three-five-seven year treatment for the economy, this is the only way this legislation will be really effective. America needs to see a cessation of politicians and experts running around America and popping up all over the media clamoring Americas got to get this stimulus money into the economy over the next two years or it will be catastrophic, it will be catastrophic if America squanders this stimulus money this should be the chorus accompanying this bill. The critics of this bill are right when they say that if this bill was just passed as it is today when all the spending authorized by this bill is done what the America people will be left with to a large degree is just that the government spent a lot of money there will not be the long-term positive effects on the U.S. economy that the America people are being lead to envision.
Washington politicians needs to start listening to those economist that say the recession has to largely run its cycle. There is no switch that Washington can flick-on to get business to start investing and hiring again. An economic recovery from a recession is a process that takes time. Certainly, the government can help that recovery process, but there are no quick fixes. Washington has to stop forming this stimulus legislation as if there is a quick fix to the recession because what they are going to end up with is a failed fix to the recession and instead of a three to five year recovery time frame the nation will experience an eight to ten year recovery time frame, needless to elaborate on the hardship this will mean for the many Americans hurt by the lingering recession.
That is not to say that a significant portion of the foundation of the current stimulus bill isnt good and shouldnt be included in the final version. If the contents of the stimulus bill reported in the media are correct, there is a workable draft that can facilitate the timely passing of a stimulus bill. The State fiscal relief of $79 billion and the Medicaid to states of $87 billion is largely good-to-go, states have been, are and will be over the near term hurting from the loss of tax revenue from the recession and it is absolutely the right thing to do for the government to do to help the states in this way; it will be getting the states through this two year revenue loss hump the recession will likely bring. The $5.1 billion for job training, $8.6 for Medicaid for unemployed, $21 billion for Alleviating Hunger and $36 billion for Unemployment benefits seems to be largely good-to-go expenditures. Helping Americans who lost their job due to the national recession is again just the right thing to do. Spending billions to help those who lost their jobs due to the recession with health insurance costs is definitely the right thing to do; however, the $30.3 billion reported in the media to be spent for cobra health care for the unemployed raises some questions to ordinary Americans, it seems like maybe it is too high. The cobra program entails that when an employee loses his or her job with an employer, the employee has the right to continue with the health insurance coverage that employee had with his or her employer the only catch is that the employee just has to pay the portion of the premiums the employer had been paying for the employee besides the employees portion of the premiums. The question that many Americans would have about this stimulus legislation expenditure is that many of these layed off workers had better than your basic high deductable health insurance coverage with their employer and many ordinary Americans are living with this basic bare bones coverage which raises the question why should I as a taxpayer be paying through this stimulus bill for a health insurance plan, that is supposed to be just part of a social safety net, that is better than mine it doesnt seem fair.
To a large degree the balance of the stimulus bill presents the real issues. The balance of the provisions have the real potential to have a significant long-term impact on America and its economy. The public discussion must be held and the legislation processes must be effectuated so that the nation makes wise and its best efforts to have these stimulus expenditures optimally help America have a strong and vibrant economy and put this recession in the past.
