Can We Spend Our Way Out?

The politicians are banking on turning the economy around though use of a stimulus package. The theory behind economic stimulus programs is that if you put money in the consumers pocket they will spend it. What would you do if the government sent you back $1,000 of the previous money you paid in then added $1,000 to the national debt?

President Bush enacted a stimulus package in his first term. 1 out of 5 people spent the stimulus while 4 people either paid down debt or saved the money. If people are loosing faith in the economy don’t you think most would save as much as they can? Consider that over 60% of Americans plan on spending less this Christmas. What makes the government think that if they send us money that we’re going to run out and spend it?

What Else Is In Your Hat of Tricks? When I listen to the politicians speak about turning the economy around the solutions suggested are nothing new that hasn’t already been tried in the past. Our politicians have tried stimulus packages, tax cuts, tax increases, deficit spending and the list of tricks goes on and on. However, the dynamics of today’s economic crisis are not common ills that require common prescriptions to cure the virus that has spread globally. While the politicians point to remedies that were used during the great depression and suggest their actions will help avoid an economic meltdown globally they have no historical reference point or model to suggest their theories are correct. A lot of old talk spun against new problems which are systemically connected to everything and everyone globally. We’ve never had this condition before.

Throw Money At the Problem? The current deficit estimates of cost for all the currently planned bailouts, stimulus packages as well as the rising cost of supporting basic government, federal and state, operating plans etc exceed $7 Trillion. Did you hear me? $7 Trillion!

Throwing money at problems as complex as the current global economy and expecting us to stimulate the economy by spending more is not sound fiscal policy or clear thinking. Maybe I am not smart enough to understand economic policy however I am smart enough to add and to use common sense. Consider:

*Everyone is coming to the government for a bailout and you’re having trouble saying no

*You tell the auto industry you want a plan yet you haven’t showed your own plan to the American people

*You are using words like “hope, possibilities, creativity, resolve etc. etc.” while we the people use words like “foolishness, stupidity, selfish politicians, economic depression and despair.

*We see main street businesses going out of business. You see Fortune 500 Executives flying in for a handout in a private jet.

*We see friends wondering how and where to get a job so they can support their family. You see special interest groups wishing to protect their positions and their institutions.

The money our officials are throwing at the problems is debt. OK, so the message for the American public is just increase your debt and everything will be OK. Business owner’s, just borrow more money and everything will be OK. Don’t worry we the government will just print more money so there will be plenty to borrow. So you ask how will we pay it back? The government’s response: By spending more! And you wonder why we the people have no faith in your decisions. Maybe we should call it The Spend Economy.