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In response to readers February 1, 2009

Posted by neoavatara in Economy, Politics.
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I have gotten numerous comments (not all did I post) regarding my belief that the Obama Stimulus plan will not work.  Most of the fair minded people simply ask what would I do instead?  Well, I outlined my ideas on my stimulus plan:

https://neoavatara.wordpress.com/2009/01/30/the-neoavatara-national-stimulus-plan/

I have tried to outline why I don’t think the ‘FDR/New Deal approach’ is the right one.  First, let us come to consensus.  What is the goal of the stimulus?  Well, this in itself has divergent views.  I think most Democrats, once you get through the rhetoric, would say the point is to limit the pain caused by the current recession.  And there is certainly something to be said for that.  I think most Republicans would say the goal is to get the economy moving forward again for long term growth.  Understand, these are TWO DIFFERENT GOALS.  That is part of the division politically.

The ‘FDR’ plan was excellent at reducing pain and suffering, but did a terrible job of getting the economy moving forward.  I have shown that, as have others; you can see my comments on that here.

So then the question is, what will improve the economy?  Historically, it seems to be actions that increase business investment.  That generally means tax cuts; whether it was Kennedy’s, Reagan’s, or Bush’s, each did stimulate the economy.  And each did more to create long term growth than FDR’s New Deal.

So one has to answer ourselves, will we try to meet one goal, or both, in the stimulus plan.  I would argue the current plan may meet goal #1, but doesn’t answer goal #2.  The Republicans have been focused on goal #2, largely because they don’t really have any more voice than that.  What the public wants, I have no idea.  I will say this.  I have seen no excitement from the public for this stimulus plan.  Have you?

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Comments»

1. pobept - February 1, 2009

Most people alive now are to young to remember or even educated enough to know it was the out break of WWII that put Americans back to work and ended the depression of the late 1920’s and 1930. It was Not FDR or his policies that lead to the end of this depression.


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