Wednesday, February 11, 2009

Let's spend our way out of debt!

Currently, the House and Senate are set to meet at 3pm to reconcile the "stimulus" bill on the table. Yesterday, the Senate passed the bill with a vote 61-37. Obama made it very clear from the beginning that this would be a bipartisan created and supported bill, but it is clear from the numbers that only 4 of the 41 Republican senators supported the Senate bill...I guess that is a little better than the House bill in which not a single Republican member voted for the bill, but did pass 244-188 via the Democrat majority. So here we are with a bill that totals $838 billion, and only 4 Republicans out of over 200 have been supportive. Now that is what I call bipartisanship!

Critics will say that the Republicans are playing the "usual games" on Washington, failing to support the president in his attempt to drive our country into a situation that is potentially more dire than our current one. It is true that in the past 8 years, Republicans did not stick to their fiscal conservative montra, but they too realize the magnitude of the bill on the table, and they're turning things around. No more wasteful spending.

Now, the bill. It is comforting to know that in the original plan, $21 million was going toward putting new sod outside of Capitol Hill. $21 million for new grass? New grass so that Washington can look pretty. Perfect. Nancy Pelosi (Speaker of the House; Radical liberal democrat from Californ-I-A) claimed "mistakenly" that if this bill was not passed immediately, that we would lose 500 million jobs. ERRRRRRRR. Hold on. People say she misspoke, and I would hope that she did because there aren't even 500 million jobs currently available or employed in the United States. In fact, there aren't even 500 million PEOPLE in America. Ok, so she misspoke. Let's say she meant 50 million, or even 5 million (which is very, very far off from 500 million). The fact is, the far left liberals on Capitol Hill are using scare tactics to get this bill passed ASAP. Scare tactics are very effective on people who are uneducated about the content in the bill.

President obama even said in his prime-time press conference on Monday night that Washington can't sit back and do nothing. This is very true. But that is the last point that he and I agree on. I believe we can't do absolutely nothing at all. But if we do something, shouldn't it be methodically thought out and planned before it is put into action? Isn't that what every logical human being does in his or her own life before making a life-altering decision? Having a baby, buying a home, choosing a college, considering treatment alternative for an illness....don't you consider your options before you make your choice? And it usually takes more than 3 weeks doesn't it? Our president has only been in office for 3 weeks and 1 day, and he wants to spend $838 billion of taxpayer dollars to spend our way out of a recession. Another important point to consider is that to get yourself out of debt, you do not spend more money. If I have $5,000 of credit card debt, I don't then go and spend more money to get rid of the original $5,000. It is completely illogical. Also, with interest, this bill will not cost $838 billion, it will cost over $1.3 trillion. And this, this is a very BIG deal. Once taxpayer money is spent, its gone. We can't get it back.

The bill currently sits at a 2:1 spending to tax relief ratio. Many of the programs listed in the bill are for things that do not stimulate the economy, and most of the spending programs do not create a single job. If we are in the worst economic crisis since the Great Depression, according to obama himself, then we should be looking to create as many jobs and let Americans keep as much of the money they earn as possible. If he wants the people to spend more money back into the economy, the only way to do that is lower the amount they are required to give to the government. This can be translated as: tax cuts. It seems that for the democrats it's like going from Czech to Portugese. They just can't figure it out. And they're making it far more complicated than it needs to be. Please do not mistake this as a proposal for an elimination of taxes. That wouldn't work either.

So we have a bill that is going to cost us over $1 trillion. And how are we going to pay for this up front? The only way to pay it back is with taxpayer dollars, but what about now? We are not going to give 100% of our paycheck for the next 5 years.

[I guess with Bernie Madoff stealing $50 billion from investors, at least we could have had a down payment]

But no, the most likely scenario is that we are going to have to print the money. Oooh yeah, that sounds like a great idea. Wrong. It's called inflation. The value of the American dollar is going to plummet, and the price of every major good is going to go up. Way up. Because the dollar can't buy as much. The value of the American dollar affects every other major economy in the world.

Obama said on Monday night that if we don't act and pass this bill, America could become just like Japan in the 1990's, which they call Japan's Lost Decade. Currently, the exchange rate for Japan is .011 Yen for every dollar. Their currency is worth nothing. But do you know how they got there? Japan quadrupled their national debt by trying to spend their way out of a recession. Obama was the one who brought up Japan, and 10 years after their own "bailout" they are still in debt. I guess he wants to do the same thing.
For more background on the Lost Decade, check out this link:

http://www.moneymorning.com/2008/07/17/the-lost-decade/

That's all for tonight. And just think, I am only scratching the surface...

5 comments:

  1. Wow, you really have been paying attention...thanks for doing this blog.

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  2. shannon!! i love this so much...and i don't even like blogs, haha. it really is refreshing to hear the other side (myself being represented on "the other side") for a change...and with intellectual thought accompanied by passion! keep it up, honey...and we'll see what happens. *sigh* i heart you...and miss you.

    -heather (from j.crew, lol).

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  3. that was probably the most ill informed discussion of the economy I have seen in while. you have to remember that economies of a large scale do not function in the same sense as your personal finances like being $5000 in debt. in macroeconomics, of which i admit i am not an expert, the welfare of the nations business and individuals is based on the fluency of currency- even though Bush was one of the worst presidents of all time (you talk about increasing our debt. . . ) even he understood that for the economy to be strong, Americans need to spend money and buy into the idea that our economy is strong so he even encouraged us to go out an shop after 9/11. Borrowing / lending lead to increased purchases which leads to jobs for people in retail and sales. our economy is based on confidence based on sales numbers and when we stop spending on a mass scale, we lose confidence in our economy and thus the troubles begin. And your analysis of Japan is just god awful- they have one of the strongest currencies in the world that is trading at multi-year highs to the dollar and euro currently. an exchange rate means nothing in your comparison terms of .011- maybe if Japanese people only made 30,000 yen. . . but they dont they make 3,000,000 yen and the Japanese people have some of the highest purchasing power in the world, and yes they are still in debt after 10 years- the U.S. has been in debt for 30 years, and a little debt is actually healthy politically speaking. darn the Japanese for spending their way back from the dead. . . and you have to also understand that a strong dollar is not always a good thing. The stronger the dollar, the more expensive it is for big multinational corporations like McDonald's or Coca-Cola, Microsoft, or GM. Most American business's thrive on a weaker dollar. I personally don't like a weak dollar because it makes the individual citizen less valuable, but for the overall capitalist society in which we live it can unfortunately be a good thing. Most republicans as opposed to democrats would actually prefer a weaker dollar.

    You want the government to give tax cuts to the American people- somebody already tried that and now we are in a recession, and even though I personally don't think there should be any more tax cuts (in personal financial terms- why would you ask for a pay decrease when you are in debt?) there are tax cuts in the stimulus package for middle class families- those being hurt the most. In the last 8 years there has been no wealth creation below the top 2% of the wealthiest people in America- it's time to stop the trend of letting the rich get richer and the poor get poorer.

    And I CANNOT believe how much rhetoric you buy into- bringing up Pelosi's misstatement is just ridiculous, of course she knows there are not that many jobs in America and probably meant just thousand instead of million. get over it. the fact is 100s of thousands of jobs are being lost and even Republican governors who have to actually deal with those losses in their home states- unlike the senators and congressmen who are lost in washington- know this and many of them support the bill. almost every single state has a budget shortfall and needs the stimulus money to stay solvent.

    Senator Specter (R) even said that most republicans know that a stimulus bill is needed to keep the economy afloat but they don't want to lose elections (because of constituents like yourself) so they are voting against it.

    are there parts of the stimulus that are unnecessary? yes, but this is a heck of a lot better management of our money than during the Bush years. I was a republican too at one point, but that man along with rush limbaugh and the idealogical insanity of the right wing, and the lack of fiscal restraint (the building blocks of a strong nation) drove me away. not to mention the fact that political parties are toxic to the national good- this stimulus plan is a prime example of how party politics and the national good are often at odds. independent for life! good luck with this blog though, i think it is a good start, but needs just a fact checking to go along with the great writing.

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  4. I appreciate the comment, but I would hope you would at least say who you are if you want to participate.

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  5. I think it would be very refreshing, and "real change", if instead of repeating everyone else's biased opinions bloggers would try to educate themselves and form independent opinions to share. "Real Change" in my opinion would include inserting yourself in to the process where you can BE PART OF THE CHANGE YOU WANT. Placing blame and following the status quo of the GOP is not real change. Getting away from the two party system would be real change, encouraging EVERYONE to be bi-partisan or non-partisan for that matter would be real change, encouraging our elected officials to serve their constituants' interests instead of allowing lobbyists to buy their votes would be real change. I held it in as long as I possibly could Shannon. I still adore you...

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