DJIA Below 7,000
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Today was a pretty routine day – woke up, did a lot of laundry, cleaned up around the house, went to the gym, fertilized our vegetable plants, and helped my mom cook dinner. Throughout the day, I kept my eye on the stock market, and it’s sad to say, but we’ve reached a point where our economy has dipped down to 1997 levels.
Now I’m going to make this short because I’m sure people are sick of me complaining, but come on… $30 billion additional dollars to AIG? Bleh, at this point, I wish some of these companies would go bankrupt (though that’ll be even more catastrophic).
The free enterprise economy of our nation is cyclical by nature. There will be periods of prosperity, intermittent durations of stagnation, and even some frames of recession. Mind you, the second half of 2008 brought more than the typical “recession” in terms of losses, but the way it’s being handled by excessive government spending is utterly ridiculous. I was reading one of my friend’s Facebook posts, and he cleverly acknowledged the fact that you rarely see people in the lower income bracket generating jobs, and therefore revenue, for others. While the lower and middle classes may account for the majority of citizens in this country, it’s the large corporations and small businesses which bring forth the jobs. With outsourcing, executive abuses, etc. aside, in order to “create more jobs”, you need to keep the “job creators” happy.
Also, starting at the end of 2009, my brother and I will be filing our income taxes independently from our parents and businesses. In doing so, we’ll be considered members of the lower-middle class (by income) and start getting our feet wet with social security, Medicare, FUDA, and SUDA taxes. Never too early for any of that. Ultimately, we plan to have Kumar Creations Inc. (consulting), RK Creations LLC (DBA Sport Clips), and our respective medical practices classified under one “foundation.” Still years away from seeing that realized. 
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Published: 2 years, 11 months ago
So if these companies going bankrupt would be more catastrophic, isn’t that what we’re trying to stop by bailing these companies out? My only disagreement with the bailout is it helps the top CEO more than it does actual ordinary Americans. These are the same CEOS of like GM, Ford, who say the reason their cars are a piece of crap are bc they have to pay salaries to union workers, when the ingenuity and innovation to make the crap cars are at the top, not at the bottom with manual laborers, who just do what they are told.
It doesn’t matter HOW much of a tax break you give these companies they WILL still ship jobs overseas as it’s easier to pay an Indian 50 rupees an hour which is still lower than paying even minimum wage in the United States and this is WITH business tax loopholes AND where businesses can write off literally anything as a “deduction”. This trickledown economics, where we have to give tax cuts to the top 5% and the middle-class and the poor have to hope and pray that the top 5% will find it in their hearts to create jobs with that extra money – instead of doing what they usually do which is pocketing it or putting it locked in a bank is utter BS. Instead, why not actually give those tax cuts to middle-class and the poor, so that they have MORE MONEY to spend which leads to more consumers, resulting in more revenue generated and better business (trickle-up economics)? Or like Obama says – take away tax breaks to companies who ship jobs oversease and give tax breaks to those who create American jobs? Republicans after all want results right? Why would you give someone tax breaks when you are not guaranteed an American job being made? Why not have them make the American job first, then give the business a tax break for doing so? Oh that makes too much sense.
I’ll tell you my taxes going to pay subsidies for oil companies and corporate agribusiness is the real abuse. Look at Rick Santelli and his neanderthal rant – saying that people whose homes have been foreclosed are “losers” and that those Wall Street people around him are the “silent majority” and are a “good cross-section of America” (and you wonder why right-wingers lost). Then when Robert Gibbs goes toe-to-toe with him to tell him to actually READ it, Santelli cries and says his life is being threatened and Matt Lauer confronts Santelli and he hides behind the wife blaming her.
Those “job creators” which we “need” to keep happy are the ones who got us in this mess. They are taking money and STILL not freeing up credit. Guess what if banks all start going bankrupt, credit freezes, and NO ONE will loan anything and business will come to a standstill. Oh wait, but Republicans just don’t want that standstill on their watch, only on Obama’s watch. Ok, gotcha.
For conservatives to say, that absolutely no government intervention is necessary, and that tax cuts alone will solve this (the stimulus was 35% taxcuts – personally I don’t think ANY of taxcuts should have been given if no Republicans were going to vote for it – of course they’re more than happy to take credit for it back home for their constituents) is absolutely ludicrous.
Published: 2 years, 11 months ago
So how much should the government keep spending? Apparently, there are no plans for a cap in sight. That’s fine though, since everyone will pull their own weight in paying it back, right? And true, bankrupt banks will spell doom for everyone, but even after the stimulus/bailouts, why are banks still teetering along bankruptcy? Because investors are quickly losing faith in this administration’s ability to bring us back on track and are anticipating a longer, more severe recession than ever expected. The whole “we need you to survive, so let’s bail you out” mentality’s lack of targeting is becoming more and more apparent each day. I’d like to see spending by the lower/middle-classes bail us out of that problem.
Look, there’s no solution that will make everyone happy. We’re talking along the lines of the fundamental difference between Republican and Democratic economic theory. I understand where you’re coming from when you say that the rich will hold onto their riches rather than it trickling down to everyone else, but you expect me to believe that in this recession, spending is the true answer to creating jobs? By giving the lower/middle-classes more money, you expect them to successfully convert it into more money or a stable job? Maybe a handful will dare embark on something so risky, but at this point, I surmise that they too will hold onto any surplus until signs of an economic turnaround become evident.
I’m no politician, and I have no good solution for this problem. But maybe you do?
Published: 2 years, 11 months ago
Actually, yes I do expect you to believe that increased spending will work: look at the graph: http://blogs.e-rockford.com/applesauce/files/2009/02/depression_gdp_output_1.gif
(I like this version of the chart using data from the U.S. Department of Commerce as certain dates are labeled).
Once FDR got in office, GDP actually kept on increasing with the implementation of the New Deal and this was LONG BEFORE WW II, hence nullifying the talking point that WW II was what got us out of the Depression and not the New Deal. Yes, WW II helped (which also required increased spending, by the way), but GDP increased LONG before that. In fact, if you see the graph, the only time GDP stopped increasing was when FDR started to cut spending and tried to balance the budget. You don’t cut spending during a recession/depression. The entire point is to INCREASE spending and pump more capital/liquidity into the system. That’s how you get out of a recession. Does that mean spend all the time even when not in an economic downturn? Of course, not. But during an economic downturn, the LAST thing you should do is cut spending.
“By giving the lower/middle-classes more money, you expect them to successfully convert it into more money or a stable job?” — You’re not understanding what I am saying. I don’t expect the middle class or poor to create jobs out of their tax break. However, they will be able to buy more consumer goods resulting in more cash floating in the economy, resulting in increased profits for businesses, resulting in increased revenue for businesses, after which businesses can then “create” the jobs they so desperately say they would do, if they had more money. Instead of starting at the top (where I have no accountability or guarantee that they will create jobs and not pocket it), I’m starting at the bottom, people who are more likely to spend (you’re right they theoretically could save it – but this isn’t likely as they are working just to make ends meet, pay bills, etc.). Also remember, the Bush tax cuts are still in place, yet unemployment is at an all time high. So the solution is what, give a larger tax cut?
In the omnibus bill for example, 40% of the earmarks are from Republicans. At least Democrats are known to spend and admit it, but for Republicans to preach “fiscal responsibility”, decreased spending, and all of a sudden worrying about the deficit after amnesia for 8 years, but having no problems with earmarks (which benefit their state, i.e. Mitch McConnell who has has more than $75 million worth of earmarks in the omnibus bill) is truly disingenuous.
Published: 2 years, 11 months ago
I don’t know who you are UTSWStud, but you are absolutely correct. Kudos, it seems you have more time than myself to formulate such fantastic arguments. The government is going to stop spending the same way I’m going to stop spending, when i die.
Published: 2 years, 11 months ago
“With outsourcing, executive abuses, etc. aside” —- That’s exactly what is the problem in the first place and is why the American people don’t believe that companies that get tax cuts will take that money and create more jobs. You can’t set those aside as those are the central issues at hand.
Published: 2 years, 11 months ago
And the resolution to that problem is what you explained in your first comment – give money to those companies who’ve shown their loyalty to Americans working in America.
Published: 2 years, 11 months ago
So again I ask… is there an end in sight for this spending?