So I'm a little frustrated about the current economic times; I've always been strongly opposed to defecit spending and budgets that just don't come close to being balanced. Thus it was with great frustration I watched these 'economic stimulous' plans which took tax money which I had already parted with (I'm not opposed to paying taxes in anyway; I complain like everyone else, but it is necessary and I do it) sloshed it around and sent it back to me. So I like getting money; but I didn't like the fundementals behind it. I understand the thought that if you give people a gift they will spend it; well maybe yes maybe no. To me it is a panic move that induces panic. Here you are telling people that the economy is falling apart, but here's some money that you should spend to save it (the economy). Lets play game theory again (its becoming a recurring theme sorry about that) You can 1)trust that spending all of it will save the economy 2) hoard it, as worst case the world collapses but you have $500 3) a combination. You'd probably go with 3, and depending on your view more towards 2 or more towards 1. But chances are you wouldn't spend it all- and that is the number that is thrown around. It just doesnt work.
Now Pres Elect Obama wants to do the same thing: $500 for everyone working (and oh-by-the-way a defecit of 1 trillion) Which Nancy (Clueless) Pelosi has said she is chomping at the bit to sign into a bill. So lets spend spend spend!!! Free handouts for everyone we'll let some other generation pay for it. Urgg. If I ran my house like this I'd be in foreclosure; The only difference is the Chinese havent called in our debts yet. Sigh.... what can I say I'm a frustrated.
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13 years ago
4 comments:
A fact that I found very interesting, and I think put things into perspective well is this:
After World War II, our national debt was about 120% of Annual GDP. 120%!! Currently, our national debt is about 45% of Annual GDP. This is largely due to GDP growth, and NOT due to us actually paying down our debt. Most economists feel that running a budget deficit when our economy is in TURMOIL is a sound practice, and that running that debt up to between 60 and 70% of GDP would not be a terrible thing if it could get our economy out of this slump and spur renewed GDP growth. The problem is that Bush had us running budget deficits long before our economy was really in turmoil...
Plus, I think the majority of those people getting those checks DO spend the whole thing - I know we spent the entire $1800 that we got last time (yes, kids are nice for taxes, I'll be honest), and I think most people in the income brackets that get the rebates are in the same case as us. They've got debts to pay down, credit cards to pay off, etc.; which is money spent back into the economy, and that's the purpose of the whole thing.
"If I ran my house like this I'd be in foreclosure; The only difference is the Chinese havent called in our debts yet." What house? I think you might see things differently when you have some real significant bills to pay, my friend, and some real tough choices to make. Keep enjoying life while it's worry- and debt-free, though, as it won't be for long! :-)
Not fair... thats why I don't have a house. I could go out and buy a 600k house knowing full well I couldn't pay for it, but I don't. And that is exactly the point.
Sorry, maybe not totally fair... but my point was that it's just like the rich calling out the poor for being poor and saying it's their own fault and they're just not working hard enough - it's just not that simple and clear-cut. It's not just people buying homes WAY beyond their means - your $600k example - that have caused this problem.
In large part it's people who bought houses that were within their means with a bit of a stretch, who were convinced by dirty mortgage brokers that they could stretch even a bit further with some nifty loan with all sorts of cool clauses that ended up screwing them over... "Interest Only" and "No Paper" loans come to mind in particular... Yes, many people assumed incorrectly that the good times would continue to roll on, and they didn't... However, everyone makes purchases all the time based on assumptions - we all generally assume we're still going to have our job next week, to start with. If we all lived life thinking we were going to lose our income tomorrow, everyone would save every penny and not invest in anything of minimal liquidity, such as a home. My point is that it's easy to say that "all these idiots bought homes they couldn't afford, and it's their damn fault", but it's a heck of a lot more complicated than that, as is the decision whether to run a fiscal deficit or not.
Plus, we've NEVER paid down our national debt, and we probably never will. Just as we got from 120%-of-GDP debt down to 45%-of-GPD debt, through GDP growth, is how we will reduce our "effective" debt in the future. Me having $10k in debt is a heck of a lot different than Donald Trump having $10k in debt - it all has to be put into perspective related to total wealth and income. Yeah, $11.5 trillion sounds like a TON of money, which it is, but our nation produces about $20 trillion in goods and services every single year, so when put into that perspective it just isn't all that great...
Our nation is falling apart at the seams, as we've failed to invest in our own country and our internal resources for far too long, and spend spend spend is what it's going to take to fix that problem.
Hearing what you're saying, it sounds like you'd be a proponent of tax INCREASES? Or do you like the chain-saw technique for cutting spending, instead, to ofset the reduction in tax revenue?
Also, I don't see how giving out tax rebates "induces panic", although I would agree that it is a panic move by the government - and I believe that the panic is justified given the current economic state. By the same argument you made about people spending or not spending their tax rebate check, can't one argue against tax cuts in general as an effective economic stimulus? They're one and the same...
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