Stimulating economy, stimulating hope
Son,
We in this country are on the verge of a recession. I see two realities in this prediction – one is an academic understanding of economics – the other is the real human disaster of poverty and despair. I’ll speak first to economics – it is important to understand some basic principles.
A recession is generally regarded as two consecutive quarters of negative Gross Domestic Product. That means that we as a nation produce less each quarter. The formula is as follows:
GDP = consumption + investment + (government spending) + (exports ? imports), or, GDP = C + I + G + (X-M)
Using this formula we can see that increasing consumption, or investment, or government spending can decrease the risk of recession. But there are wise methods of taking such action. Increased Government Spending has consequences – like either higher government debt or higher taxes – the money has to come from somewhere.
The Republicans generally believe that tax breaks should go to the wealthy – thus increasing investments and stimulating growth. According to our formula – that is sound reasoning.
The Democrats believe that if people have more money they will consume more – a growth stimulus. So the Democrats believe in higher wages and tax breaks for the less fortunate. Perhaps you can see why I vote Democratic – my sentiments generally lie with the less fortunate.
But these are academic discussions – all with merit – all with real consequences. My concern is at the human level of suffering and comfort, of education and health care, of cohesive family, of the very human qualities of hunger, poverty, homelessness, and despair.
So my position on stimulating the economy would fall with tax breaks and even tax rebates to the lower economic strata. If we rebate $150 then they can buy some groceries for a few days. If we rebate $1000 they can buy some groceries and replace their broken refrigerator – now we are talking economic stimulus and feeding the hungry at the same time. I believe we should give hope as well as money.
This is serious business. I am offended by the politicians who debate the economy with no mention or understanding of personal human consequences.
Dad
Comment by Pete on 24 January 2008:
With all due respect a rebate will not solve our current problem. To fix a problem you need to figure out what is wrong. What is wrong with our economy is that it is based mostly on CONSUMPTION. Americans spend…spend…spend, we just consume. We produce hardly anything in this country anymore because all manufacturing has been shipped overseas. This is why the manufacturing belt is now called the rust belt ! Why is this? Corporations found it is cheaper to move overseas to produce their products and import them into the U.S. Its cheaper because the employees work cheaper, they dont have demanding unions, they dont have to pay 7.5% social security tax, they dont have to pay sky high corporate taxes or heath care costs for those employees.
So, if you want to improve the American economy, you start with cutting the corporate taxes. This will allow corporations to use that extra cash to invest back into the company and expand, which creates more jobs. Raise taxes and tariffs on imports. This will bring business back into the U.S.
That is just the start, dont stop there though. Continue by creating ways to help pay for health care so corporations dont have to. Look for alternatives to social security to remove the 7.5% tax burden on corporations.