As the economy continues to contract, and job losses continue to increase at an alarming rate, Obama is being pressured to take more action. Now that we have a 2 trillion deficit, folks are calling for more stimulus next year. Well, if there was a stimulus plan in 2009 instead of a spending bill, we would have seen a real impact already.
â€œYou may need more fiscal stimulus in 2010,â€Â Jan Hatzius, chief U.S. economist for Goldman Sachs Group Inc., said in a Bloomberg Television interview. The impact of the package already passed will start fading by early next year, he said.
The President says that bold actions and big ideas are needed. That’s code for increasing taxes further, and socializing as much of everyone’s lives as possible. We will continue to spend what we don’t have, and force our kids to pay the bill. If you’re looking for bold action and big ideas, here’s some thoughts. First the premise that only people with money can spend money, and only people with money can invest money, basic fact. Next fact, if you have a tax policy that encourages investing and lending, people will do so. And if increased lending and investing occurs, then capital is raised by companies and that’s how jobs are created. When the jobs are created, people will then have money to spend, and the cycle continues and grows.
So what bold action and idea is needed? Let’s start with this. Eliminate any barriers to investing and saving. Get rid of capital gains. This gets people with money to invest and lend. Next, really cut payroll taxes, not just this $13 per week thing that just got passed. Do a real tax cut so people have real cash to spend. A real tax cut so people can save, which will go into the capital markets for companies to borrow and create jobs. A real tax cut and helps people pay off some debt, allowing more savings and spending. A long time ago, a crazy man once said, “people who don’t have money can’t buy anything”. He was talking about a different issue at the time, Nafta, and that statement is applicable todays situation. I don’t want this to come off as sounding cruel, but it is a fact. Folks that are poor do not have the collective financial resources to drive and spur an economy. It’s the middle and upper class (as it relates to wealth and spending power). So it would seem to me that there is a two fold initiative. First, providing a safety net for the poor which I’ll address in another post, and incentives for those with money to spend, save and invest. The latter is done through a tax policy that steers people to invest and spend, not punish them for making money.
Obama said yesterday that the â€œastoundingâ€ job losses show â€œbold action and big ideasâ€ are needed to revive the economy. â€œWe have a responsibility to act, and thatâ€™s what I intend to do,â€ he told a group of Ohio police recruits aided by his stimulus package.