Wednesday, January 7, 2009

President-Elect Obama plans major speech and stimulus package

Mr. Obama is planning a major speech to discuss his $775 million stimulus package. Aside from some minor opposition from the fiscally conservative "Blue-Dog" Democrats, the package has wide support from Congress, economists, and the public. Despite wish lists of everyone involved, Mr. Obama has yet to discuss what this plan will include.

Some suggestions:
- research funds for alternative energy development–not only would this spur huge job growth by essentially creating a new economy, but it will also improve our environment and national security while ultimately hastening the advent of cheap and clean renewable energy

- federal clunker (car 10+ years old) trade-in program: government buys old, polluting, fuel-inefficient cars and money must be spent on hybrid or electric car/truck made by American car company. This would not only clean up our air and reduce our country's fuel consumption, but it would also give a bailout to the auto industry that is inextricably tied to its development of hybrid/electric  technologies

- increase federal grant and loan programs for college students, so that middle income families get a break, too; and make college expenses tax deductible

- increase education budget; decrease defense budget: we need lots of smart workers to dig us out of this recession. One of the reasons we're losing jobs in the U.S. is because business is going to more innovative companies abroad. We especially need funding in math and science.

- provide financial/credit counseling to low/middle income families for free: Imagine how much less of a mess we'd be in if people knew what they were getting themselves into buying a brand new home with no money down.

- provide a bailout to the arts and non-profits: The arts employ about 6 million people in the United States. Most importantly though, the arts keep our country's populous well-cultured, educated, and entertained–all of which we need during a recession more than ever. Non-profits also could use a little help. It is they who know best how to assist the hungry, jobless, homeless, and depressed, but they can't do it without funding, most of which has been lost with fewer donations.

- Don't focus on tax cuts! Tax cuts would stimulate savings instead of spending. Saved tax rebates would ultimately hurt business, which would result in lost jobs. The government would get more bang for its buck in stimulating job growth rather than spending. While jobs are long-term fixes that bring money back to business, tax rebates merely would serve as a short-term shot in the arm. Perhaps the government could take this opportunity to invest in large-scale public works and infrastructure projects, not unlike the New Deal.

3 comments:

ballin4life said...

Saving and investing is the source of economic growth, not consumption.

Remember that all money the government spends is taken from the free market where it would be allocated more efficiently to meet consumer demand (since people want to make a profit and there is competition).

All this government spending will simply make the economy worse by misallocating resources.

Also federal loans and grants for college are what drive the price of college up so high. We would be better off eliminating these so college prices would fall.

The idea of free counseling or free whatever falls into the same trap: who is paying for this? It's taking more money from the taxpayers. Same with funding arts and nonprofits.

There is no way to avoid a recession. The government can only make it worse.

The New Deal (and similar policies by Hoover) caused the Great Depression and we are headed down the same path with this ridiculous amount of government spending.

Jason Bade said...

Clearly not a fan of Keynes economics? :)

bryan moore said...

After promising to move towards a more balanced budget Obama is proposing huge new spending? It seems that we are just continuing to delay the point at which we cut spending in order to be financially responsible. As much as i support spending on schools and new programs a line needs to be drawn somewhere.I do not think that we need to owe china and other creditors another 500+ billion. Though passing our debts onto the next generation in order to stop this recession sounds like a relatively good idea we are not accounting for the damage that will occur when these debts are called up. The federal government is acting like the irresponsible homeowners that took the mortgages that caused this crisis, taking large amounts of money with no plan to pay it off. I agree with ballin4life that saving and investing will help the market. Though saving and investing will take longer to get the markets back to where it was, citizens spending beyond their means played a part in this recession and I do not believe that the government in essence doing the same thing will solve many problems in the long run.