Crap Sandwich a la Commode (revised)
Q: What should Congress do to stimulate the economy?
A: Lower taxes; get out of the way.
The unpassed faux-stimulus bill is already starting to pull down the economy as the financial markets start to drive up fed interest rates because of the very real fear of a US government default. A fear is a reality irregardless what the actual likelihood is. And few things are more sensitive to emotion than the financial markets.
The goal of the stimulus package is to borrow money to finance activities that will cascade into prosperity. But the government borrowing money sucks capital out of the financial markets that would have otherwise gone into building real economic activity.
The intended scenario: The government pays Joe “Union” Member** to build a Monument to Stupidity. Joe gets paid, buys a new car and Big Screen TV which feeds Jane and LeRoy “Union” Members in the auto and electronics industry. Unfortunately, Joe bought a Volkswagen built in Bavaria, and the electronics industry left the US ages ago. So the money the Government borrowed at great expense goes to Europe and Asia. Unless there is some reason for that money to come back to the U.S. (aka: trade) the government just flushed that borrowed money down the toilet. Instead, they are trying to create a trade war with “American Only” clauses.
The part that’s missing from that scenario is that the Government doesn’t give money to union members. The Government gives money to companies that employ union members. But companies are only going to hire workers if they see an opportunity to prosper over some long term. What companies see with the Democratic government is an increasingly hostile business environment. Companies that take the government dole and make a profit will be punished. The US has the second highest business taxes in the developed world. If they survive the taxation, they have to compete against incompetent failed businesses being propped up by the government because their CEOs are big Democratic Party donors. There will be oceans of new regulations. Many regulations are driven by the Democrat’s desire to rule all things. Many others as history has shown are driven by special interests buying favors from their favorite politician to eliminate competition. Where’s the incentive to prosper, much less opportunty to? Ultimately, the only permanent jobs that will be created will be unnecessary civil service positions. Yet another drain on the economy.
Punishing success, rewarding failure, and strangling the financial markets is not the road to prosperity. Congress is playing the populist card by talking; Jobs! Jobs! Jobs! But jobs do not create wealth. Wealth creates jobs. When companies are making money, they hire people to make them more money. When companies THINK there is a chance to make money, they hire people. When they see no financial advantage, they retreat.
The “Stimulus Package” needs to die.
** We’ll ignore the 87% of the work force that is not uniion. They don’t exist in Democratic eyes because non-unions don’t contribute to them.