Monday, June 10, 2013

Spend Big Lose Big: The stimulus fail

Let me start this article out with a simple math equation 1x2=2 ,1x(-2)=-2. Now anyone who attended any type of school knows that this is known as a multiplier. Now let's bring that theory to our economy. The stimulus bill though with good intentions was the wrong way to go about trying to fix the economy. And in this article i hope to provide you some insight on to why it was a bad decision.
The Main flaw with something such as the stimulus is that for every dollar you put into that is one more dollar you take out of the market that could be spent in a more productive way. It takes away the markets' ability to take care of itself, which is often referred as the "invisible hand".The Founding Fathers believed in this and to much of their credit it's proven to be right. Unfortunately, our current leaders didn't seem to agree with them. Our current leadership chose the road less traveled and chose to landscape their bill after FDR's New Deal. Now with that statement alone we should've have known the stimulus would fail but hey, why not try it again.
There were Multiple arguments against the bill while it was being debated. One of the more important one was John Mccains' argument. Senator Mccain proposed a stimulus package that would've costed 430 billion dollars. This bill was based on spending cuts,lowering tax rates, and tax reform. The argument ? Well the Keynesian's argued that it didn't spend enough money, which might explain why the actual bill eclipsed a trillion dollars.
In the end the stimulus bill failed to meet even there most optimistic predictions, we actually would have been statistically better off doing nothing at all. The stimulus package was full of "shovel in the ground" projects which just added to the alarming debt burden. One of these projects was actually for a joke machine to be built at a university ($700,000). These projects awarded states who lived outside their means and punished those who did. But all that set aside in fails in comparison to what the wreckless spending in Washington is really doing, and that is committing generational theft. At one point we will have to pay back all of the debt, but it wont be us it will be our children and grandchildren!!! Are we really okay with that? I would like to think not.

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