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1/13/2009
Burri: If we ever needed a do-nothing Congress, now's the time
What, precisely, are we trying to stimulate with this economic stimulus plan?
Duh. The economy. What else?
Okay. So…what does a stimulated economy look like? How will a future, stimulated economic era be different from today?
More people selling, more people buying, I guess. And since we’ll have more of those, we’ll also have more people working. Businesses can’t sell more without more to sell, and people can’t buy more without earning more.
So, now for our chicken and the egg moment: Which comes first? The selling? Or the buying?
If we’re going to spend billions upon billions of our grandchildren’s dollars trying to stimulate one (or both), then that’s an important question.
On one hand, obviously, the buying is more important. Hey, that’s where businesses get their money – from customers. If we want more economic activity, it means we’ve got to stimulate spending somehow.
The question then is: How? The last round of stimulus checks didn’t do a whole lot, or so I’ve read. People either paid off existing debts, or stashed the money away. Even if they did spend it, it made for only a temporary spike.
We need people to have more income regularly – not just once. More and bigger paychecks. Regular paychecks. That’s the key.
Okay, so that’s great, but…those bigger paychecks have to come from somewhere. Every dollar we have – whether it came from a paycheck, welfare, a loan or a bailout – started with business.
So we need more selling first. Except businesses need a reason to try, and until more people are spending more, they won’t have that.
So. Are we going to send stimulus checks on a monthly basis now?
Well, we could. This newest $350 billion President-elect Obama asked President Bush for adds up to $1,150 for every man, woman, and child in the U.S. We could send everybody monthly checks throughout 2009.
Subtracting, of course, for the administrative overhead. Surely, we could clear $50 a month per person?
Let me change direction now, before I convince myself that this is a good idea. Because it’s definitely not a good idea. Consider this, from Bloomberg (via the Corner):
If the stimulus bill passes, the deficit next year will be $1.7 trillion.
… The whole world’s military spending in 2006 totaled a little less than $1.2 trillion. So next year’s U.S. deficit could cover that and still have $500 billion left over for building bridges.
…When President George W. Bush was first elected, total federal government spending was about $1.7 trillion. In other words, the [deficit] this year will be bigger than the entire government was as recently as 2000. Scary.
So let’s back up a little – back to the question “what does a stimulated economy look like?” It looks like people earning more. That takes healthier businesses.
How do we get healthier businesses when we don’t have the paychecks yet? Without incurring debts so big that our grandchildren's grandchildren will be paying them?
It’s not that difficult a question, really. What do businesses want? To make money. So: if we want more business, and healthier business, we make it easier for them to make money.
You don’t have to give them anything. In fact, you don’t have to do anything. Businesses are already incentivized to succeed.
Lower the cost of doing business. Of getting started in business. Reduce taxes. Suspend mandates. Show the business community that we’re committed to them.
It’s not as dramatic as hundreds of billions of bailout dollars, of course. Doesn’t look like we’re “doing” anything. In fact, my advice would make our political leaders look like standers-by. Onlookers.
Well, if we ever needed a do-nothing Congress, now’s the time.
Lance Burri is a contributor to the Badger Blog Alliance and occasionally blogs at his own site as well.
COMMENTS
Let us ;hear it for gridlock? If we can not act positively ( and governments seldomdo) let us not act at all.
Only one problem I can see. In order for our Congress to do nothing-not tax some for the benefit of others, not charge bureaucrats with harassing businessmen, they first must ACT to get these impediments out of the way. Otherwise, very good piece of work here Lance.
Ken Van Doren (Tue Jan 13 08:59:38 2009)
The best thing that could happen to businesses, the right-wing refuses to give them. Zero taxes on businesses is a good start, but as well, a Medicare-for-all system would cut corporate costs by $6000 per employee per year. We'd bail out all corporations that have and add new employees, not just the few favored by the politicians.
But instead of pragmatism we are faced with idealistic thinking. If political money were not driving the system that's exactly what we'd have today.
Jack Lohman (Tue Jan 13 11:10:04 2009)
Jack
Your proposal would do the opposite of what you say. The big corporations were pressured by government into providing a level of pay and benefits that are not sustainable. (To be sure, corporate mismanagement is also a factor worthy of discussion.) Many of us pay our own health insurance, and your system would bail out exactly those big corporations that you rightly protest as having been favored. Not to mention, when health care is free, it will certainly be more expensive than it is now. Want to make health care more affordable? Get the government OUT. No payments, no subsidies, minimal regulation, and limits on proceeds of lawsuits would go a long way to reducing health care costs. The more the government has involved itself in the various ways that it does, the higher the price. Now YOU want to transfer the obligations of corporations to those of us who pay our own health insurance? Not an answer. Not unless you want to insure the bankruptcy of this country. Let the companies and their unions work out a settlement WITHOUT the force of government on one side or the other.
Ken Van Doren (Tue Jan 13 11:58:41 2009)
Ken, we disagree, but that's nothing new. The Big Three are making more cars in Canada because they have Medicare-for-all and we don't. It costs them $800 per employee per year there versus $6500 per year here. And 80% of their people prefer their system to ours. Go figure.
>>> "Not to mention, when health care is free, it will certainly be more expensive than it is now."
Clever words, but absolutely incorrect. See the chart on my link above. There are dozens of very qualified and non-conflicted think tanks than agree with me. As a Libertarian I don't expect you to.
Who said that health care was an "obligations of corporations???" We want corporations to survive and compete in the global market, and they can't with this burden.
Jack Lohman (Tue Jan 13 12:28:34 2009)
Jack, you've built your ideology so big, you can't see past it. I lived in a country that had the equivalent of "free" healthcare for all. We moved to the US in the middle of a "recession", and I was able to buy more (and better) household stuff from rummage sales here in ONE summer, than in the whole previous15 years of living in that country.
Why was everything so expensive there, and wages so low that we barely scraped by? Why did we live in accommodation that was 55 degrees indoors, or less? Why did we have 2 adults and 4 kids stuffed into 4 12X12 rooms--(and we were better off than a lot of people)?
When "the government" pays for this, that, and another--the population WILL suffer, as NOTHING is free! The economy was so hampered by the nanny state, that our living conditions were not unusual. In other words, we lived in what would be called slums here in the US, but we had "FREE HEALTHCARE"!
As to the mess the US is in now, this is because FDR and his ilk paid unfortunate attention to one Keynes, who proposed an "economic" model based on endless CONSUMPTION--the old name for TB--which I see as NOT a coincidence.
When you have a nation addicted to endless consumption, as opposed to production, and self-sufficiency, you will get what we have now. And adding to the mess will be any and all further "funding" by that "magic genie", THE GOVERNMENT. But where do you think the gov't will get the money to pay for everything you want? Nature abhors a vacuum (i.e. the concept of pulling money out of the air does NOT work; even nature shows you that!)
So of course, the population as a whole will have to pay for it. Or else we'll get super-inflation, as more and more un-backed Monopoly "money" whizzes off the printing presses. Either way, our country WILL be poorer (but I hope, wiser) in the end.
emily matthews (Tue Jan 13 21:10:59 2009)
Most certainly I agree to being immovable on the issue of health care, Emily. It took a long time for me to get here, but it wasn’t without a lot of serious thought and 35-40 years experience in the industry. You did not mention your home country but I'd encourage you to look at this chart and tell me where it falls on the list.
You are right that nothing is free, and even in Sweden they pay higher taxes than we do and have free care and education. They also have what is considered the highest standard of living in the world. This is from a friend in Sweden, and don't miss this link.
I generally am a free market capitalist, but I draw the line on allowing one segment of the population to rip off another. That is what has trashed the US and worldwide economy, thus I've also become "unsold" on a free-for-all system without regulations and laws to protect those unwilling to join the dog-eat-dog world of survival.
Jack Lohman (Tue Jan 13 22:46:26 2009)
Jack, I've also spent years "in the business"--but let me tell you, government is not the answer, it is the problem. Consider the time before isurance companies were created: a dr's housecall was maybe one dollar. If a man shot himself accidentally, and ripped open his jugular with a BB gun, his family dr. could repair it in his office! (TRUE story, ask my mom).
Then along came WWII, and Congress decided to freeze wages. Enterprising companies started offering free insurance to tempt scarce workers. And the whole thing snowballed form there, but it STARTED with gov't meddling, freezing wages.
Consider the AMA, and the fact that in early 1900s, they got the gov't to license out of existence practitioners other than themselves--allopaths. Overnight, competition halved, and the remaining dr's got to double their fees. Again, gov't meddling at the bottom of it.
Re. Sweden, I don't think I like their suicide rate: if everything's so rosy, why is it so high? I bet if one took this chart of yours, and applied it BEFORE 1900, BEFORE government meddling, there would be a very different picture. At least I can say that in the US, if you have to call 911, you'll be in a hospital within an hour, much less if you live in town. Unlike in the UK, where I lived, where you could end up riding around in that ambulance for literally FIVE HOURS or more while they try to find a hospital that'll take you.
emily matthews (Wed Jan 14 17:02:59 2009)
I'm surprised at your negativity on single-payer, Emily. Easily 75% of the nurses unions are in support of it, and 59% of physicians. If you haven't already, take a look at www.pnhp.org.
Jack Lohman (Wed Jan 14 18:42:25 2009)
Geez Jack. I think I know what Emily might say about the opinion of nurses unions....
Jo (Wed Jan 14 19:37:30)
Jack: "Ken, we disagree, but that's nothing new. The Big Three are making more cars in Canada because they have Medicare-for-all and we don't. It costs them $800 per employee per year there versus $6500 per year here. And 80% of their people prefer their system to ours. Go figure."
Well there you have it Jack. If you like the Canadian system, by all means, move to Canada.
Not sure on your figures, but they are not central to my argument. You refuse to address the reasons I spelled out earlier for differences in costs in other threads, or you give statistics or arguments that are not credible, like insurance costs being less than 1%, or implying if not stating that all 31% of the current bureacratic overhead would go away under a government health plan.
Socialized medicine is a very appealing Trojan Horse. It offers the false hope of something for nothing. But do you think the socialists, once having control over another 10% of our economy (the government already pays half) will stop there? I do not care what mechanism you use to window dress your proposal, but "one payer" means "one controller" and if that controller either is the government or paid for by the government or controlled by the government, that is tantamount to socialism. And socialism is "progressive." The socialists do not like freedom or folks who can think for themselves. They desire to control vitually EVERYTHING.
Read Bastiat's The Law. EVERY argument he made almost 160 yrs ago rings true, and sounds a lot like the arguments of today. Read "The Road to Serfdom, anything by Mises, and you will find eloquently argued the fact that socialism leads ultimately to economic decline. Like it has in most of Europe, and especially Great Britain. Or how about Argentina, 100 years ago the world's 4th largest economy, now barely more than a 3rd world nation. Or how about the US, which is very visibly declining morally, socially and economically as we devolve into a socialist country.
Sure a war or 2 helps push us along, but note that historically, socialist countries, from ancient Sparta to Nazi Germany tend to be more warlike. Sweden is something of an exception here, one European Country that was not devastated by WW II, which at least in part explains why they may be relatively more well off than most of Europe. I do not like 70% tax rates, do you? If so, go to Sweden. As I stated in another thread, I would even settle for voluntary socialism here. If you want socialism, you pay for it. And I will pay a lesser rate of taxation, paying only for police protection, the military, and a very few basic services provided by LOCAL government.
We are on a downward spiral, mostly because of the devastation of the Federal Reserve and our trend toward socialism. I prefer Freedom. I am very sorry that you do not.
>>> "Not to mention, when health care is free, it will certainly be more expensive than it is now."
Jack: Clever words, but absolutely incorrect. See the chart on my link above.
Again, our government ALREADY pays half of our health care, or more than most on your chart. So by your logic, we just need to eliminate all private payment, without increasing government payment, right? Specious argument on its face.
Jack: There are dozens of very qualified and non-conflicted think tanks than agree with me. As a Libertarian I don't expect you to.
And there are dozens of think tanks that agree with me. And most of yours have a vested interest in the growth of government. And like you, many do not account for other reasons why our health care may be more expensive. Sometimes you do not even need to be an "expert" to poke holes in the logic of those who claim to be.
Jack: Who said that health care was an "obligations of corporations???"
Those who believe that health insurance is a right of employment. Emily points to the historical roots of employer funded health care. We should end it ASAP, or at the very least, let self insured folks deduct their premiums and other health care costs without the limits now placed on deductability of medical expenses.
Jack; We want corporations to survive and compete in the global market, and they can't with this burden.
I only want viable corporations to survive. Mismanaged firms deserve to fail, and ultimately will anyway. We could help make companies MORE survivable by limiting the costs we impose on them, either by way of taxation or regulation. We could better insure American jobs by leaving more money with both employers and employees, and STOP subsidizing the exportation of jobs.
Enough for today. Next time you bring this up, and I know you will, I will explain to you another very important reason we can not afford to grow government. HINT: WE ARE BANKRUPT!!!!
Ken Van Doren (Thu Jan 15 01:28:40 2009)
You go Ken!!!
Jo (Thu Jan 15 04:29:29)
Ken, I could have easily said "if you want zero regulations and zero laws, go to Somalia." Sweden doesn't have 70% taxes, it has 50%, and they socialize only health care and education. And oh, they pay for the elecftoral process rather than having it funded be special interests. You, know, political corruption!
What really surprises me is that, after conservatives have ruled for 20 of the last 28 years, you are still pounding your chests claiming that your way is the only right way. I don't think you've ever answered my question: How are you liking the results so far?
Oh, I know. It's the liberals that got us into this. Not Phil Gramm's lifting of banking regulations -- or any of the other deregulation; the liberals!
Jack Lohman (Thu Jan 15 06:34:25 2009)
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