That is the essential idea behind the stimulus package that the government is proposing. I've been doing some homework (not actual homework, because that would mean that I didn't have to spend the rest of day and today working on the thesis because I would actually be ahead, rather I mean reading up on stimulus stuff and rudimentary information on economics) and it's really interesting the opposing philosophies that are operating right now.
The current plan that passed through the House yesterday and will soon be voted on by the Senate was proposed by Democrats, Obama's people. They follow the Keynesian economics model that suggests that in the event of a downturn in the economy, the government should intervene and either lower interest rates (which has already happened) or invest in infrastructure. That's why Obama keeps saying things like he wants to create 3 million new jobs through building roads, highways, etc.
Again, I don't have an in-depth knowledge of economics, but from what I understand the Keynesian model was developed in the 1930s, and is based on theory not applied experience. That is the case with a lot of economic theory, but the problem is that while mathematics can operate almost entirely on models and prediction is pretty accurate, economics is math based on human behavior, which is entirely unpredictable. While following the Keynesian model, the Japanese were never able to emerge from a decade-long recession that occurred in the 1990s.
One opposing model is supply-side economics which asserts that growth and stimulation is achieved through incentives that come in the form of favorable tax policies. This is the model favored by conservatives and has some pretty favorable support coming from Kennedy, Reagan, and George W. Pretty favorable is understating it - Reagan faced a much bigger problem than we're currently encountering. Not only did Reagan come to office in a depressed economy, but inflation was out of control and the world was just emerging from enormous energy bills, the likes of which we were seeing over the summer, but not any longer. Reagan initiated his tax cuts and the result was the creation of 19 million jobs while he was in office and unprecedented economic growth. Bush initiated his tax cuts and the results, although not quite as dramatic, were similar - lots of growth, low unemployment, until the buckling of the credit markets and the housing crisis, neither of which were Bush's fault.
Anyway, I mention all of this as a context for the articles that you'll be reading up on. What the stimulus doesn't provide is an immediate influx of money into the economy and emphasis on job growth, about half of it is actually going to special interests groups. This article from the editors in The Corner at National Review highlights some of the major expenses. This article talks about how the stimulus package is a prime example of good politics, but bad economics. This post by Byron York takes the highlights from a piece from Drudge Report and shows specifically what a lot of the money is going towards. This article is kind of long, but gets into more of the details about Keynesian economics and the problems with it. And this one is authored by Rush Limbaugh talking about splitting up the stimulus in half - one part for government spending, and the other for tax cuts - and use it as an opportunity to see which theory wins out.
What's funny to me is that people keep referring to Obama as the great unifier, that he's different because he reaches across the aisle. This is the same politician that had the most partisan voting record of anybody in all of politics, let me stress that, all of politics. He never authored any significant legislation that reached out to Republicans. And in his first 10 days in office, everything he has said and done has been nothing but partisan politics. He wanted Republican support for the bill, but not one GOP representative voted in favor of the bill in the House, and 11 Democrats actually voted against it. So rather than bipartisan support, it has received bipartisan opposition.
I can't find where I saw the number now, but the interest that would be required to pay off this increased spending will be in upwards of another $800 billion, but that wouldn't be paid for at least another decade. And I think I've mentioned this before, but the spending that would occur wouldn't even come in time to stimulate the economy now, instead coming in another year or two. As it stands right now, the stimulus is just a ploy to increase government spending, shift power that was lost under Bush back to special interests, and increase the reach of government while using the guise of economic recovery as a way of securing its passage.
Sounds fantastic.
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