From: CJ Primlani <cprim2@...>
Subject: Economic Stimulus
To: bushbuster04@...
Date: Sunday, February 8, 2009, 11:01 PM

YES WE CAN

YOU CAN SAVE THE ECONOMY

 

We can with a massive collective effort save the economy. President Obama’s stimulus plan is being thwarted by Republican Congressmen with their spin against it. Unfortunately they are gaining public opinion. I give below a simple explanation of why his plan will work. Please circulate extensively and ask the recipient to contact their Congressman and demand support for President Obama initiative.

 

The Republican mantra: To stimulate the economy, tax cut allows you to spend the money, is music to the ear and brings them many votes. The fallacy: All that revenue that the Government gives up the Government cannot spend. That money could have been spent 100 % and immediately, causing money to circulate. Big and small business could have made money and would have needed employees to fulfill their contracts. It would have reduced or eliminated layoffs. The expanding number of employees would have caused money to swell in the hands of the consumers, creating an increased demand for goods and services that businesses would have reached for. They would have expanded their operations, hiring more employees and so the economy would have spiraled upward. Instead the Bush tax cuts have caused a retraction of the economy.

 

What is happening to the money the people are supposed to spend? Most of it goes to the few that are very rich whose excess wealth already fulfills their needs. A large portion of the tax cut is locked out of circulation. From the smaller portion a large slice goes to the upper middle class. They may spend only a part of it and certainly are in no hurry to do so. Their contribution to stimulating the economy is a far, far weaker effect than the Government would have effected with that money. Only a small portion of the tax cut in the hands of the needy is put into circulation fully and immediately.

 

The tax cuts that business gets may seem to help the bottom line, but is a poor compensation for the considerable reduction of profits due to the weakened economy. Another Republican mantra: Give taxpayer money to businesses and they will hire more employees. What is their incentive to do so? The consumer’s capacity and desire to spend is considerably diminished. Factories are cutting back on production, stores are discounting to the few customers that enter. If money is in the hands of the consumers business will need no additional incentives. They will expand their operations to reach out for that money.

 

Many in Congress are concerned about borrowing the large sums of money for the stimulus. Those that borrow for an education have done well and the nation has gained from it. The entrepreneur or businessman with a good idea borrows money does well and so does the nation. The homebuyer borrows money and enjoys the comfort of living in his or her castle. At the same time puts may people to work. Demand is created for earth moving, for concrete, wood, piping, wiring, fixtures, drapes, carpets, appliances, furniture, decorations etc. Homeowners are considered good credit risk, and banks are eager to loan them money and thereby the money circulates briskly.

 

We spend money it is good for the economy. When the Government spends money a strange effect comes into play. Using bases of $100, when the Government spends that money, the beneficiary A owes taxes to the Government. For easy discussion let’s say an average of 20%. The cost to the Government is immediately reduced to $80. When A spends that money then recipient B owes $20 to the Government, further reducing the Government’s investment. As this money circulates to C, D, E and F the Government makes a profit! Of course it depends on how the money circulates. It will fall out of circulation in the hands of the rich, while the poorer people will spend it fast.

 

Where should this money be spent? We have many aggravated problems begging for monetary attention. The money needs to be spent domestically. My personal choice: invest heavily in solving the energy problem. It will generate many jobs. Each step of progress will cut the flow of money leaving our country. It will reduce demand and lower the price of oil and gas. Technology gained can be sold and generate much needed income for the nation.