Real Stimulus that will work

(Jan 28, 2009) – Like I was sayin… somebody will eventually come up with a good idea.

Today, house republicans put forth an alternative stimulus that actually makes sense.  It is short on sod, governement vehicles, ACORN funding, contraceptives, and $500 checks.  What it does do, is cut everyone’s taxes and offers some minor spending reductions.

The Economic Recovery and Middle-class Tax relief act of 2009 focuses on cutting taxes.  It cuts tax rates 5% accross the board, increases the child tax credit from $1,000 to $5,000, and freezes capital gains taxes at 15%.  This will never reach a vote as house democrats would rather try to increase spending and handouts in an attempt to jump start the economy.

The problem is that our elected representatives don’t seem to remember the impact of the last stimulus package which did little to help the economy.  I wasn’t against the govenment sending me a check, but it is only a temporary blip and didn’t do much to stimulate the economy.  If the dems send everybody a check for $500, people will simply pay off bills or pay down debt.  However, a permanent cut in taxes will change the behaviors of people.

The Republican bill will positively impact the economy in a number of ways.  First, businesses will have less taxes to pay.  Some people will argure that “businesses don’t pay enough taxes and should pay more”.  However, many people fail to realize that businesses just pass the expense of taxes on to you.  Will smaller tax bills, currently successful firms will be able to invest and grow which means jobs.  Struggling firms will have a reduced tax burden which will help them stay afloat.

Individuals will benefit in many ways.  Most importantly, they will have more money in their paychecks.  This won’t be a one time check, but will show up in every paycheck.  People who are struggling will have more money to make ends meet.  People who are doing well will have more money to spend, save, or invest.  It is also important to remember that when people save or invest, that provides more capital for businesses to use to grow with in turn creates jobs.

People need to stop worrying about which party proposes something and think about what the bill does for themselves and the county.  If government spending stimulated the economy, we would have the best most stable economy in the world.

Recession? What Recession?

Like I was sayin… it’s all in the numbers.  The results for first quarter GDP growth came out today indicating that the economy is not in a recession.

Although the results were weak, the 1st quarter posted a 0.6% gain in GDP  which is the same results for the 4th quarter of 2007.

For several months, the media has been proclaiming that we are in a recession.  This is echoed by those politicians that would benefit from the U.S. economy being in a recession.  Several weeks ago, presidential hopeful Barack Obama accused Bush of being oblivious to the fact that we are in a recession and that he was pushing policies that would do nothing or make it worse.  Seems now that his statement that everybody knows we are in a recession was somewhat inaccurate.

The economy is far away from some of the stellar results between 2003 and 2006 and could very well move into a recessionary period in the 2nd and 3rd quarters.  I for one am hopeful that this doesn’t happen or at least hope for it to be a quick and shallow one.