Tuesday, January 22, 2008

Hang Onto Your Wallets

Another government stimulus package is coming our way. I realize the economy is starting to sag and may need some propping up, but how are we going to pay for this?
The government has only three ways to get money; Tax, Borrow and Save.

If the government raises Taxes to pay for this program, it will stimulate a faster fall and a bigger problem. Taxing always tightens up the economy and increases unemployment. In my article "Tax or Not To Tax", I layout the forced effect of increased expenses on business. These effects hurt the nation and the individual. So Taxes are not the Answer.

If the government Borrows the money, we are simply pushing the debt onto a future generation with additional expenses for interest and inflation. As bad as that sounds, it gets worse because borrowing also effects our relationship with trade partners. Borrowing reduces the value of the dollar in the world market. We suddenly have to pay more for everything not produced inside our borders.
Now I know some of you would like to see us turn our backs on trade and start looking at home grown products. I don't blame you for this protectionist perspective, but home grown products are not going to suddenly appear over night. Industry has slowly migrated from our shores over decades. It will be a lengthy process to bring this home. In the mean while we will be paying more and getting less.

If the government Saves the money by eliminating or cutting some of the things it buys with our tax dollars, then it would truly stimulate the economy with no ill effect on the whole. Those cuts, what ever they may be, will have an effect on a small sampling of our nation. I find it far better to lose a small part of the body then allow the entire body to fail.
Perhaps we can choose to cut international "Good Will", "Buy A Friend" foreign give aways. Let's start with Cutting the vast sums of money we put into the UN. How about cutting all gifts to non democratic nations? What about dropping all direct cash aide and only offering specific destination driven supply aide? Perhaps at home we can stop congress from bringing home the bacon in the form of pork barrel spending?

I'm afraid that this rush to save the day will result in another fire sale where we borrow and give our nation away so that future generations can reap greater consequences for our lack of responsibility.

Another Sad Day in America as we pave the road to Hell with good intentions.

Article of Interest

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