Please Don't Stimulate Us

[Tigermike 3,055]

Mr. President, Don't Stimulate Us

Friday, January 18, 2008 8:25 AM

by Scott Ott

Expect bi-partisan support of a new "emergency economic stimulus package", proposed by President George Bush this week. The Democrats will tweak the details, add more spending and shove in a few projects that couldn't pass on their own merit. The two parties will come together to "rescue" an economy that teeters on the brink of...shall we say, less aggressive growth?

The stimulus package, of course, echoes one of the great ideas that brought down the former Soviet Union -- the idea that the centralized government has a big panel of buttons and dials before it, that simply need to be manipulated in the proper sequence in order to "jump start" or "stimulate" the economy.

Picture House Majority Leader Nancy Pelosi, D-CA, holding a pair of defibrillator paddles, ready to apply them to the chest of "the economy". Problem is, the heart hasn't stopped beating. If it suffers any arrhythmia, it's due to over-stimulation from a welter of taxes and regulations which Rep. Pelosi and her ilk have imposed during decades of attempts to control the economy like the Wizard of Oz yanking levers from behind the curtain.

Memo to Washington: There is no "the economy"

What politicians, professorial consultants and industry lobbyists refer to as "the economy" is not some kind of machine that responds in predictable ways to specific macro-inputs and adjustments. It's not like my '64 Ford Falcon which ran smoother after I gapped the plugs and cleaned the carb. In fact, every emergency government intervention causes numerous, unintended and chronic consequences, and sets in motion forces that will lead only to more "emergency stimulus" legislation later. Adam Smith understood this before 1776.

Rep. Pelosi, do you want to make a law that will impact the economy for good? Try this: No one shall be allowed to serve in any branch of the federal government until he shall have passed a test proving that he understands, and affirms the principles enunciated in Adam Smith's "Wealth of Nations".

Legislative Exuberance

Former Federal Reserve Chairman Alan Greenspan once warned of "irrational exuberance" in the stock market. Now, Fed Chairman Ben Bernanke has partnered with the president and Rep. Pelosi to stir up a little legislative exuberance. Wrong!

Taxpayers don't need rebates, they need permanently-lower taxes. Industries don't need incentives and rapid write-downs of capital expenditures, they need permanently-lower taxes, a radically-simplified tax code, and deregulation. Corporate farms don't need subsidies, they need free and fair markets. Government doesn't need more revenue, it needs merciless downsizing and vigorous cost-cutting.

Give Me That Old Time Economics

Growth, stagnation and decline are cyclical and we all need to recognize that and prepare for it.

The presidency, as Theodore Roosevelt said, is a "bully pulpit" (bully here is an adjective, not a noun). Perhaps President Bush could use his influential perch to teach Americans a little lesson in Old Testament economics.

* Store up grain for the inevitable years of famine.

* Let the land lie fallow every few years to replenish it. Don't sap the soil that feeds you.

* Don't charge usurious interest rates.

* Don't lend unless you can afford to lose it.

* Don't borrow if you need it, only if you can gain from it, and can pay it off from liquid assets, not cash flow.

* Plant your fields, then build your house -- crank up your income before you spend any on comfort.

* Work hard, and put your money to work as well, so you'll have fruit this year, and seed for planting next.

* "It came to pass..." as the King James version reminds us repeatedly. No economic trend lasts forever.

Of course, man, being what he is, will ignore such common sense advice. He will offer his brother a low-interest loan pegged to a wildly-gyrating index, almost guaranteeing a future foreclosure. His brother will eagerly take that low-interest loan, risking his family's home on the delusion that income always increases and outstrips expenses. A mere examination of personal history would disprove that fantasy. Meanwhile, brilliant folks on Wall Street create "investment instruments" to allow other brilliant people to gamble on the outcome of this fools' covenant.

Stop Touching Me!

Nevertheless, government is not instituted to protect you from yourself. If you take a risk, you bear the consequences. When your risk pays off, do you ask Uncle Sam to relieve you of your windfall surplus? Of course not, and you get lathered when he taxes your hard-earned reward. So, likewise, when your endeavor fails, don't ask the rest of us to cover your loss.

And the next time you hear anyone talking about the need to "stimulate" the economy, think of a time when someone touched you in a way that they thought you would enjoy, but you found it abrasive, annoying, and nearly unbearable.

More than anything, at those moments, you want to shout: "Stop touching me!"

If "the economy" could talk, that's what it would yell at Chairman Bernanke, President Bush and Rep. Pelosi right now.

http://scottott.townhall.com/

[LegalEagle 22]

Apparently the gross spending of the Republican administration and congress is not part of the problem.

As to saving up for lean years, I'm all for it. But, when a person is drowning, it is not the time to suggest he take swimming lessons.

I'm not for giving back money we don't have to stimulate anything. I am not for reduced taxes until we have a balanced budget. Then on the savings on the national debt, we can lower taxes 28% with no impact on the money available for the government to spend. When you are drowning in debt, the answer is not to reduce your income.

Nancy Pelosi this, Nancy Pelosi that. . . How juvenile! How could anyone think such an article is objective and accurate??

[TitanTiger 20,511]

All this Adam Smith talk aside, count me among those who could use $1600 right now. And we'd actually spend it. There are a couple of pressing needs right now that we'd use that money for and it would be a huge help.

[rexbo 104]

I am not for reduced taxes until we have a balanced budget. Then on the savings on the national debt, we can lower taxes 28% with no impact on the money available for the government to spend. When you are drowning in debt, the answer is not to reduce your income.

If all you care about is a balanced budget, let's just raises taxes to 75% on every dollar over $100k annually (no one needs more than that to live on) and we could pay it off in a few years; think that would stimulate the economy?

Reducing taxes (rates) increases Gov't income due to an expanding economy, not reduces it. The surest way to get to a balanced budget is to decrease taxes and Gov't spending.

[LegalEagle 22]

I am not for reduced taxes until we have a balanced budget. Then on the savings on the national debt, we can lower taxes 28% with no impact on the money available for the government to spend. When you are drowning in debt, the answer is not to reduce your income.

If all you care about is a balanced budget, let's just raises taxes to 75% on every dollar over $100k annually (no one needs more than that to live on) and we could pay it off in a few years; think that would stimulate the economy?

That's fine with me.

Reducing taxes (rates) increases Gov't income due to an expanding economy, not reduces it. The surest way to get to a balanced budget is to decrease taxes and Gov't spending.

Then, why don't we eliminate taxes and be prosperous? Sounds simple to me.

We've spent our way into this problem, so we'll spend more to get out of it. Sounds like a plan - although not a very good one.

[otterinbham 0]

It's really very simple. If Bush and the Republican Congress had simply limited government spending to some kind of sane level, there wouldn't be a budget deficit, even with all the tax cuts. The problem is that the idiot not only cut taxes, but heaped a wholly unnecessary entitlement program into the mix, and didn't make anything but a token attempt to do anything about Social Security. Add the rash of pork barrel spending that's mushroomed over the past eight years, the Department of Homeland Security (a necessary evil, but one that that's not demonstrating a lot of effectiveness either), increased defense spending, et al, and you have a recipe for serious economic problems.

On the other side, tax cuts actually yield more tax revenue. Witness the fiscal policy of the Kennedy administration or, a bit closer to home, the capital gains tax cuts of 2002. Since capital gains taxes were slashed from 25% to 15%, capital gains tax collections have more than doubled.

I mostly vote Republican and, when it comes to fiscal policy, I am becoming more of a libertarian. But it really amazes me how people can blame the Democrats for this current budget mess. Sure, the Democratic Party has never seen a tax increase they didn't like. But a Republican administration and a Republican congress are responsible for this one, chiefly by ignoring the party's ideological roots.

Are you people just sheep? Willfully blind? Can somebody please explain it to me?

[TexasTiger 13,028]

I mostly vote Republican and, when it comes to fiscal policy, I am becoming more of a libertarian. But it really amazes me how people can blame the Democrats for this current budget mess. Sure, the Democratic Party has never seen a tax increase they didn't like. But a Republican administration and a Republican congress are responsible for this one, chiefly by ignoring the party's ideological roots.

A) Are you people just sheep? B ) Willfully blind? Can somebody please explain it to me?

C) Both