Monday, June 4, 2012

Should the government spend more money on stimulus?

The problem with government stimulus is that it has a tendency to just throw money at a problem, and hope that something good comes out of it. The $800 Billion stimulus package that Obama threw out there at the beginning of his term was nothing more then a pork barrel slush fund for his political friends in Congress. What happened to all those 'shovel ready' infrastructure projects that were discussed at the time? They never materialized. (if they ever even existed in the first place)

Even the bailout of GM was little more then a payoff to the autoworker's unions. GM could have accomplished the same turnabout had they just filed for bankruptcy, and it wouldn't have required a single dime of taxpayer money. So, this idea that President Obama 'saved' the auto industry is disingenuous at best. Were some auto worker jobs saved? Probably, but the numbers would have likely been insignificant. Ford didn't take a single penny of stimulus money, and it did (and still IS doing) just fine GM was in trouble because it wasn't competitive in the marketplace. Bailing them out with government money gave them a a chance to get their act together, but they still have to produce products that people want to buy. All the stimulus money in the world can't make that happen. It has to come from WITHIN the company. 

You want to spur growth in the economy? Give companies an incentive to hire new employees. Right now, corporations are sitting on piles of cash, because they have NO idea what's going to happen with Obamacare. They have no clue as to what their healthcare costs per worker are going to be going into next year. They don't know what OTHER new taxes await them, should President Obama get re-elected. Also, given what's happening in Europe right now, there is risk that a MAJOR market for US goods and services could show an even greater slowdown then what has been seen so far. With that much uncertainty out there, there is NO way these companies are going to risk capital on expansion and new hires.

Mitigate some of that risk and uncertainty, and it's a pretty safe bet that US companies will loosen their purse strings, and start spending some of their pent up cash.

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