Obama and economic stimulus package


#1

Does the American public support or reject the economic stimulus package proposed by Obama and the congressional democrats. If the public does not support it his administration is in trouble.

I have seen polling that shows the majority of Americans support the Republican argument for greater tax cuts for business and less government expenditure.

I have also heard an interesting comment from former labour secretary Robert Reich that last year the richest 1% of Americans took home 22% of the countries national income. The last time the richest 1% took home 20% of national income was 1928, in 1976 the richest 1% of Americans took home 9% of national income. The problem according to Robert Reich is that their isn’t enough demand from the lower and middle classes to buy all the products that firms are producing.

http://tpmcafe.talkingpointsmemo.com/talk/blogs/robert_reich/2009/02/the-real-fight-starts-after-th.php
http://www.cbsnews.com/htdocs/pdf/poll_020509.pdf


#2

With the cash that’s being spent on the “stimulus” package, I think at least 90% of the mortgages in the US could be paid off. If you want to stimulate the economy, that would be a far better use of the cash and it would help the banks stay solvent.

I don’t like the bailout at all, but I’ve made my feelings abundantly clear. The fact that it’s now an “economic stimulus package” doesn’t change the fact that it stinks to high heaven.


#3

nationalize the banks and spend the money on creating more credit


#4

Here in the Uk it seems that we are getting closer to that exact policy all the time…


#5

According to the Federal Reserve, the outstanding mortgages in the U.S. are actually worth a total of 15 trillion dollars. So you really couldn’t do that


#6

the problem with any policy that helps people with unsustainable debts pay them off is that it rewards people for risky and irresponsible behaviour. Imagine having worked the last 25 years to pay your mortgage off on your own, and to find out that your neighbour who earned half what you did got bailed out by the government to pay off his mortgage.
I think people would rightfully go ballistic if the government started putting too much effort into preventing repossessions where someone clearly cannot afford the house they live in.


#7

Do people really look at the past when decieding what risks to take? Banks certainly don’t, because if the whole credit crunch taught us anything, it is that no boom last forever. Houseprices and shareprices will drop. I don’t think that bankers 20 years ahead will do “Woh, stop lending, the 2009 US government didn’t bail out the banks” Of course this is only my very limited opinion, you should probably ignor me…


#8

So the National Deficit is still less than this amount. I guess that’s something.

People don’t look to the past unless it tells them what they want to hear.

“This time, the boom will be different! Internet Stocks will never go down! It’s a new business model!” CRASH
“This time, the boom will be different! Housing Prices will never go down! Buy now while you still can!” CRASH

There was at least one book saying that the Dow would hit 36,000, and the subtitle was “Why this time is different.” Guess what…it wasn’t.


#9

this is NOT collectivism, hes bailing out companys, not people, its up to the companys to stuff with it, hes giving state money to capitalists to stay capitalists. IE state capitalism(economic regulation/control for profit).


#10

With this bailout plan, large companies will be complacent. Screw up? Never mind =)) the gov’t will bail us out! We’re too big to fail anyway! It doesn’t encourage discipline and sound judgement. Let all those unscrupulous bankers and insurers and carmakers fail and go bankrupt or be acquired. That’ll teach them. Sure, there’ll be job losses, social unrests etc, but that’s the price that we should all pay. Freedom is neither cheap nor free. Big businesses want to be free from gov’t regulations etc, but when they fail, suddenly they ADOOORREEEEE socialism. To me, it’s hypocrisy.

Ok, so what do we do to those who lose their jobs? Use gov’t funds to retrain them to become something else, provide state shacks and 2 eggs and pasta daily for them to survive so they can get another job and survive.

Those falling house prices? Well I don’t know about you guys but I’m really happy to buy cheaper homes. This bailout will only perpetuate the myth that real estate prices can only go up. People who are buying houses that they don’t actually live in (or even rent out) are wasting precious resources that could have been used for other more important things. Now that people know that home prices can fall, they’ll think twice before investing in anything. Sure, there’ll be falling demand for real estate, but why in the world do we want to stimulate demand in a useless sector that don’t create real riches?

But Obama’s plans to educate the public, reform social security and invest in renewable energy are good. Those are real investments. I say YES to a smarter, cleaner, and healthier America, but NO to subsidizing and stabilizing illusions of wealth.


#11

did you even read what I sead…


#12

My two cents…

Bailouts are a bad idea because they don’t do anything to fix the reason why these companies are failing in the first place. These companies should be allowed to fail, declare bankruptcy, and restructure so they make a profit. You also have the issue of the government trying to control these companies even more when they bail them out. The school of hard-knocks teaches very well and I guarantee you these companies will come out better.

Tell me one thing the government can do better than the free market? Anything the government can do, the free market can do cheaper and better. The government is supposed to serve the people, but over time things have switched and we serve the government.

History shows us that these big gov’t bailouts never work. The New Deal did nothing to help the economy, but it did make it worse (it even created a depression within a depression in the mide to late '30s). The only thing that brought us out of the Great Depression was the post-WW2 era where the gov’t eased regulations on the economy. Just about every recession since then has it’s ties to gov’t regulation. The current mess we are in now is caused by gov’t regulations, pressuring banks/lenders to loan out money to people they ordinarily would not give out.

I don’t blame just the government. I blame individual citizens who want what everyone else has and refuse to work for it. They have no sense of personal responsibility. They all think someone/everyone owes them something.

As for BO’s economic “stimulus”, where will it stimulate anything. This is time to truly stimulate the economy. Tax cuts across the board. We all know how much money the “messiah” wants to spend, and tax cuts has been proven to increase gov’t revenues (another problem with this game). Even BO knows the less taxes you pay, the more you have to spend, just ask any of his Cabinet appointees. Everything else in his stimulus and budget will cause real harm to this country. California has tried all that and you can see the problems they are having now.

Like I said, just my two cents.


#13

I’m agree with this part of what you said, with a hefty dose of blame for the people leading these corporations and banks into the ground.

Right here is where we disagree. Just because the most common depiction of the Laffer curve shows that cutting taxes increases revenue (i.e. we’re on the right-hand side of the maximum possible income) doesn’t mean we are actually on that side. Do I like paying taxes? Of course not. (Full disclosure - As a government employee, taxes pay my salary, so thanks everyone! :slight_smile: But there are only two realistic ways to get rid of the deficit: Cut spending, or raise taxes. Neither of these options are popular with anyone. Personally, I think they’re both going to be necessary steps.

I also don’t like the stimulus package or the bailout, but saying that across-the-board tax cuts are going to help pay down the deficit doesn’t make economic sense. Decreasing the deficit by decreasing revenue alone won’t work.


#14

I’m not going to respond to everything you said–though if you want examples of things that the government can do better than private industry, you can find them in just about every thread in this forum–but I thought this part was particularly interesting. What I disagree with is that you seem to be attributing agency to the companies themselves. Companies don’t make decisions, and they don’t learn a thing, though their executives might (as might the shareholders, though given that their influence is generally very indirect, this doesn’t matter much). Problem is, if they’re given another opportunity to make untold millions by doing something that might cause the company to fail in ten years or so, how many of them do you think will have “learned from their mistakes?”


#15

I think you make very good points, however, I think most are fed up with out of control spending. I’m not saying the government shouldn’t provide certain things, but some things such as Social Security are a waste. Decreased government spending, especially now when we definitely do not need increased government spending, should be the goal. But as I see more and more stuff happening, the saying “don’t let a good crisis go to waste” seems to ring true.


#16

I agree with this, bailouts do not fix why the company is failing. However, it is valid why the government wants some control over a company it has bailed out, seeing how its virtually a large (if not main) shareholder and deserves the right to have some control as being one. Although, if i were president and could go back in time to stop the bailouts would I? No, simply because the bailouts in some form were necessary. The main reason, in my view for having bailout is to temporarly prolong the companies fall or to allow some restructuring without having to declare bankruptcy (which can be several detrimental for the company). If all these major companies fall within the same SHORT period of time, it WILL scare investors and they will take their money out of the economy which will make things worse. I’d view it as a domino effect.

Reality check: It wasnt tax cuts that got us out of the great depression, it was MASSIVE government spending. The New Deal had 2 basic problems with it, which is why it didnt get us out of the depression.

  1. it didnt go far enough, not enough was being spent. I dont blame FDR for this because at the time this was expiermentation to a degree. Also, no industries were taken over by the government, or atleast controlled/managed to a degree.
  2. It didnt create enough sustainable jobs.
    There might be other minor problems, but those were the 2 main problems with it.

Almost all historians agree that WW2 got the american economy out of the great depression, at it would be foolish to argue with this. Now, how did ww2 get us out of the depression? Was it laizze fair free market? No! Was it slightly regulated free market? No! It was state capitalism at its extreme which got the economy out of the great depression. Government spending was at its HIGHEST during WW2. Lots of manufacturing industries (some industries not even ORIGINAL related to war production, like a toy factory) were either taken over by the government OR managed by the government, depending on how one views it.

Just for the record, I think it would be very foolish for the government to nationalize any industry (besides the banks) as of now.


#17

I disagree with several points here, but only have time for a couple. All WW2 did was create jobs. The economy did not fully recover until afterwards. And I’m not saying the government should not have stepped in after the Great Depression, there was just a lot of waste and unnecessary controls that hurt recovery. gmu.edu/departments/economic … ession.pdf