Archive for February 10th, 2009
My discussion this week will be short. The 2009 Economic Stimulus is about to be passed by the Senate. It will then go to conference committee and both houses will then approve the $850+ billion measure. The stimulus is a mix of 42% “tax cuts” (which are no more than fiat checks) and 58% spending measures and it is a massive wrong move.
Hopeful proponents assert that the Stimulus will promote new government funded growth. Employment rates will rise and the base level wealth will infuse the ailing economy with more domestic growth. The pitfalls have been outlined by the Congressional Budget Office, which is non-partisan. The CBO tells us that each new job will cost on average $250,000. The main focus will be renewing infrastructure and retooling the medical insurance industry. Personally, I would love to have a traffic flagging job that pays me $250,000. However, I do not think that all of that money is going to go to the lowest man on the totem pole.
Addressing the current economic sluggishness requires harder choices than which pet project to throw money into. The real answer has to come as a revamping of our current Federal Government’s perceived jurisdiction. I am not going to harp on this point very much in this article, but the Federal Government is already vastly overextended past their Constitutional role. The Federal Government was intended to be a peacemaker between states (who were intended to be independent nations unto themselves) and provide for the protection of common interests of all of these nations. Think of it as a proto-unsocialised-European Union. In our progress as an American people, power intended for State and Municipal governing units has been usurped and centralized in the Federal level. At the time, this was done because only the Federal Government had the ability to operate on such massive scales. With the initiation of our current society to the information age, this simply is not true anymore. A present day American citizen has been conditioned to think that the Federal Government should have it’s current reach, if not longer.
State and Municipal governing units have as much of an opportunity to take on large scale problems within their jurisdiction. What they don’t have is the means. There lies the problem. How do we tax people on top of how much the Federal Government already is to fund a laughable Social Security Ponsi Scheme that no longer provides a living wage for retirees and is just an excuse for taxation. The solution and actual stimulus would be to privatize Social Security. Encourage people to invest their money in accounts where they will gain returns and not fund $10,000 for a new broom in a Federal building. Cut FICA. Reduce the size of the Federal Government to its intended jurisdiction. In the absence of the massive Federal tax, State and Municipal governments can come in and make up the difference and fund the appropriate measures to really help the economy recover locally. This will lead to actual prosperity.
What this can really do is encourage businesses to come back to America. We can again be a land of producers instead of a nation of outsourcing. Why would you get taxed up to 40% of your income as a business when you could operate under a 12% tax rate in North Ireland? Lower corporate tax rates and businesses will move their operations back to the States to get their products closer to their consumers. This is prosperity.
My final knock against the impending stimulus is that history shows that they are largely ineffective. Look at the New Deal or the Great Society. The New Deal prolonged the Great Depression until wartime production started up. The Great Society created the welfare state. The TARP measure passed in September when it was so critical to get money into the market or we would all be doomed has been largely unsuccessful in its aims, and we are still alive. This Stimulus that is so important for our immediate relief has been delayed longer than the Democrats intended and we are still here. I think that fear mongering is what is fueling the impotence to push a Democratic wishlist bill that has been garnishing on their platform since 1994. During Japan’s 1990s depression, they passed 8 stimulus bills that did nothing to help their economy. It is obvious to anyone that is rational that Stimulus is not the answer. We need to refocus.
I will leave you with the following, 21% of the American workforce works for the government. Do we really need to let that number increase. Is the centralization of all labor and power what the framers intended for this great land or is this all partisan nonsense?
Think about it.
